The calm before the storm of the IMO’s 84th Marine Environment Protection Committee
It is clear we need to shift urgently to electrofuels made from renewables. The majority of the world’s countries which rely on fossil fuel imports can’t afford another shock like this. Take Europe’s second largest airline Lufthansa which has announced cutting 20,000 flights this year due to surging fossil jet fuels costs.
Electrofuels are fully compatible with renewables and can be made domestically or sourced from a wide array of countries looking to leverage their renewables potential for export.
Electrofuels don’t rely on the Strait of Hormuz. There is still a price gap, but the willingness to bridge that gap seems to be increasing by the day.
If you are the world’s largest fossil fuel producer like the United States, you might have other ideas. You might want to consolidate your position as the world’s largest exporter of LNG.
That dynamic will play out at the International Maritime Organization next week.
Last October negotiations at the IMO ended with a decision to delay the vote on adoption of its Net Zero Framework (NZF) by one year. This was in large part because of undue pressured placed on many governments including threats of penalties, fees, visa restrictions and sanctions on officials.
Today we called out that pressure and urged all states to refrain from threats, intimidation or retaliatory measures directed at representatives and delegates participating in IMO negotiations.
Next week governments such as Saudi Arabia and the United States will keep up their efforts to derail the NZF. Other governments have opposed the NZF like Liberia and Panama. They have suggested removing the carbon pricing element of the Framework which would damage the investment case for electrofuels and rule out revenues being recycled back into the sector and to fund just transition initiatives in lower income countries.
Europe’s largest economies together with Brazil and Mexico support the NZF, as do many Pacific nations and African governments who have resisted the undue pressure mentioned above. Like the many companies which supported this call to action, they believe the NZF is a truly global solution for a truly global sector that already represents a hard-fought compromise. It includes emissions intensity targets for ships. If those targets are not met, compliance fees must be paid. Ships that meet the strictest emissions targets which run on scalable electrofuels such as e-ammonia, e-methanol or e-methane will earn tradable credits and be eligible for financial rewards from a multibillion-dollar fund to stimulate the uptake of green fuels and fund a just transition. At GH2 we fully agree – none of the ‘alternatives’ seem in any way able to command the support we have previously seen with the NZF.
In many ways, this week has felt like the calm before the storm. There were constructive meetings at an IMO working group tasked with progressing the specific guidelines under the NZF. GH2 contributed to this work with a focus on LCA guidelines.
Over the next week, IMO member states will share their views and we will have a better sense of where things stand. GH2 and our partners are determined to ensure the NZF is agreed as the only way forward.
Joe Williams,
CEO, GH2
EC proposes targeted review of green hydrogen production criteria
Citing the slower than expected market ramp-up for green hydrogen in Europe, the European Commission's AccelerateEU energy action plan published this week proposes a targeted review of the RFNBO production criteria two years ahead of the original 2028 schedule. We understand why some in the industry have welcomed an early review and called for looser rules. At the same time regulatory uncertainty is a real cost, creating additional risk for early mover projects that have built their business cases around the current regulatory framework.
GH2 and a coalition of European and international industry partners recently wrote to the Commission in support of the current framework precisely because credibility and consistency are essential to keeping projects moving. At the same time, we said “whatever happens to the RFNBO rules, those first movers who have progressed their projects under the current framework must be protected”. We welcome that the Commission has been clear that the review will “safeguard existing investments”. That doesn’t just mean recognising projects that have already been certified. It must also ensure that early movers are not exposed to unfair competition from future projects operating under (potentially) laxer rules.
Crucially, the review must not be an excuse to delay the adoption of the other measures needed to catalyse renewable hydrogen production and use. Reopening the Delegated Act alone will not accelerate deployment. The obstacles include: inflation, high capital costs, persistently slow renewable capacity buildout, and pending Fit-for-55 implementation, including accelerating the transposition of adopted targets under the Renewable Energy Directive, FuelEU Maritime, and REFuelEU Aviation into binding national legislation.
Germany sets mandatory RFNBO quotas for land transport
To this end, the progress seen in Germany this week is particularly welcome. Yesterday, Germany's Bundestag passed a bill establishing mandatory quotas for RFNBOs in road and rail transport, rising to 10% of Germany's total land-based fuel use by 2040. The bill sets a non-compliance penalty of €120 per gigajoule — equivalent to around €14 per kilogram of hydrogen — and allows triple-counting of emissions savings from these molecules until 2037 to support early market development. The bill still requires approval by the Bundesrat before it becomes law.
This is exactly the kind of national-level implementation that the EU needs. If the Commission wants to accelerate renewable hydrogen to support energy security and industrial decarbonisation, more work is needed with member states to bring binding targets and penalties into force.
ATOME’s Villeta project has reached FID
Atome’s move to Final Investment Decision (FID) on its Villeta green fertiliser project in Paraguay marks a critical shift from announcements to delivery. The US$500–630 million project, targeting production of around 260,000 tonnes of green fertiliser annually from 2027, is underpinned by a full-volume, long-term offtake agreement with Yara International and a blended financing package involving DFIs and private investors.
This is precisely the model highlighted in GH2’s work in Egypt and Morocco: projects do not fail for lack of ambition or capital, but for lack of revenue certainty and coordinated risk allocation at pre-FID stage. Atome shows what happens when these pieces align. Fertilisers lead. Demand anchors the project. Capital follows.
The signal is clear. Get offtake right. Structure risk early. FID will follow.
