China has put forward a proposal to the International Maritime Organization (IMO) that would use an incentive multiplier to make zero- and near-zero (ZNZ) emission marine fuels more economically viable under the organization’s developing Net-Zero Framework (NZF), according to Ship & Bunker.
The submission, filed ahead of next month’s NZF technical talks, argues that ZNZ fuel prices remain high and that investment in supply capacity depends on policy certainty and credible demand signals. China’s proposed mechanism would apply a non-monetary incentive through the calculation of a ship’s attained GHG Fuel Intensity (GFI), effectively increasing the weight given to ZNZ energy in that calculation, Ship & Bunker reports.
How the Multiplier Would Work
According to Ship & Bunker, the multiplier would be fixed in advance for each compliance year. China used a cost-gap approach, comparing a ZNZ fuel pathway against a reference pathway based on conventional fuel oil and biodiesel, both aimed at meeting the same GFI target.
Based on this analysis, China calculated an indicative multiplier of approximately 1.95 in 2029, decreasing to 1.60 by 2032 and 1.10 by 2035, reflecting an assumed narrowing of the cost gap over time, Ship & Bunker states.
China’s analysis, as reported by Ship & Bunker, suggests that where ZNZ fuel supply is sufficient, the fleet-wide share of ZNZ fuels could rise by roughly 10-15 percentage points above levels projected under the current framework. Where supply is constrained, the share could instead fall by around 2-3 percentage points. China described the multiplier as a potential incentive for ZNZ uptake that would not inherently weaken the GFI target, and suggested it could serve as an alternative or complementary measure alongside direct monetary rewards, though further design work would be needed, according to the report.
Separate Proposal on Netting Rewards
In a related submission covered by Ship & Bunker, China proposed a system allowing verified ZNZ rewards to be netted against a ship’s GHG emissions pricing contributions. Under this approach, rewards and contributions would be settled in a single net payment, which China said would avoid unnecessary two-way payment flows and duplicative administrative procedures.
According to Ship & Bunker, if a vessel’s verified reward is less than or equal to its emissions pricing contribution, the reward would be netted against the amount owed, with any remaining balance paid into the IMO net-zero fund. If the reward exceeds the contribution, the contribution would be fully offset and the remaining reward amount would still be payable from the fund. China clarified that this netting mechanism would not establish a separate compliance pathway, nor would it alter the total value of emissions pricing contributions or ZNZ rewards overall, Ship & Bunker notes.
Does This Matter to You?
These proposals concern the technical design of the IMO’s Net-Zero Framework, which will influence how vessel operators, fuel suppliers, and compliance managers account for and pay for GHG emissions performance. Changes to how ZNZ fuel incentives and emissions pricing contributions are calculated could affect the relative cost competitiveness of green marine fuels compared to conventional bunker fuels in the years ahead.
According to Ship & Bunker, the direct financial and operational implications of these specific proposals will depend on further deliberation at next month’s NZF technical talks, and the source material does not detail how or when any adopted measures would take effect.
Gulf Bunkering does not provide operational or security guidance. This article is for informational purposes only. Operators should consult flag state authorities, P&I clubs, and relevant advisories for decisions relating to transit planning.
Sources: Ship & Bunker
