What does next week's IMO decision mean for green hydrogen?

The scale of the challenge

200 million tonnes of green ammonia and green methanol is what we at the Green Hydrogen Organisation estimate will be required by 2040 to meet the IMO’s goal of reducing emissions by 70% compared to 2008 levels. This is what I write today in Hydrogen Insight, ahead of the International Maritime Organization’s critical meeting next week.  

200 million tonnes is a large number, in the order of 170 Neom-sized projects. At the moment, only a small handful of projects are moving ahead. We are again reminded that our industry faces enormous challenges in the short term, with incredible opportunities in the longer term.

IMO’s next steps

It will be essential for the IMO to adopt its Net Zero Framework next week. But more work is needed. For example, shipowners have continued to order LNG vessels after the preliminary agreement of the framework in April. And we haven’t exactly been swamped with shipowners keen to ink offtake agreements either.  

In addition to agreeing the framework, the IMO needs to quickly work out the detail on the definition of “zero or near zero carbon fuels” and how shipowners will be rewarded for their use. Even if this is done in a robust manner, green projects may still struggle. It has been suggested that a reward multiplier could be introduced to further incentivise genuinely low carbon fuels. It may well be a good idea though let’s first get the framework over the line.

Blue hydrogen and biofuels are not the solution

On the positive side, while our green hydrogen projects are struggling, it is not because something else is better at replacing oil and gas for global shipping. Blue hydrogen is not taking off as some kind of bridge solution claimed until recently. In fact, Yara and BASF cancelled their large project in the US and the pipeline from Norway was shelved earlier in the year.

Green projects are easier and faster to scale. We hardly see any blue projects materialize producing genuinely low carbon products. No new blue hydrogen projects commenced production in 2024. As the IEA points out: “most of the growth stems from electrolyser-based units” which grew “60% year-on-year in 2024”.

The IMO limit of 19 grams of carbon dioxide equivalent per megajoule for zero or near zero carbon fuels should keep blue hydrogen derived products out given excessive methane leakage and underperforming carbon capture.  

DNV’s continued promotion of onboard carbon capture, as illustrated this week in their  Energy Transition Outlook 2025, is just another example of the length to which DNV is prepared to go to assist the oil and gas industry.  

Our colleagues at Transport & Environment yesterday did an excellent job in a report pointing out that biofuels will bring more environmental and climate damage than good. By calling this report crop30 they are nicely ahead of COP30 in Brazil in November, where the sustainability of biofuels is likely to figure prominently.  

We can however not only rely on the IMO for creating the market conditions we need. Cheap and abundant renewable electricity is crucial in achieving competitive green fuel pricing. While the cost of renewables continues to fall, many countries are struggling with long regulatory and approval bottlenecks.

At GH2 we continue to call for greater attention to solving what we call “the duration dilemma”, with shipowners reluctant to order fuel on a long-term basis, nowhere near the ten or more years green fuel developers need to underwrite large scale project development. Emma Mazhari, Vice President of Energy Markets from Maersk made an important observation when she was quoted yesterday as saying: “[We] typically source conventional fuel on a short-term basis. So it’s also new ground for us to commit to these long-term off-take agreements, which contain a lot of risk”. This problem is now well documented. But we are not paying enough attention to supporting innovative solutions.  

 

Jonas Moberg,
CEO, GH2