IMO Net-Zero Fund: 'It's not transparent'

A leading product and chemical tanker executive voiced concerns about the lack of transparency in how the money collected from shipowners under the IMO Net-Zero Framework would be allocated.

“It’s not transparent,” said Hafnia chief executive Mikael Skov in discussing how the money would be spent from the IMO Net-Zero Fund, which, if implemented, would collect between US$10Bn-US$15Bn annually from owners for their shipping emissions under the IMO Net-Zero Framework (IMO NZF). The International Maritime Organization (IMO), which serves as an international regulatory body for shipping, would disburse monies collected from the fund.

IMO’s Marine Environment Protection Committee has postponed a decision on the IMO NZF until later this year. Revisions and alternatives to the IMO NZF, including the fund, are being discussed.

Part of the IMO NZF, the fund could collect revenues from shipowners based on carbon pricing. Ships would be penalised that are not in compliance with two tiers of greenhouse gas (GHG) fuel intensity targets, while frontrunners that use low- and zero-carbon fuels to decarbonise would receive rewards. Owners would use rewards to help close the price gap between more costly alternative fuels and conventional fossil fuels. Additionally, funding would support training, emissions-reduction technology, and be allocated to countries designated as Small Island Developing States and Least Developed States to mitigate the impacts of climate change.

Many owners argue that the money collected for the fund should be kept within shipping to directly support the financing of fleet upgrades and implementation of zero-emissions technology, rather than subsidising global climate change mitigation.

Managing and operating a large fleet of chemical and product tankers, Hafnia spends a significant amount of time on maritime decarbonisation, said Mr Skov. The company has invested in methanol dual-fuel propulsion newbuild tankers, digitalisation to improve fuel efficiency, and retrofits to reduce the overall carbon intensity of their ships.

Hafnia has been selling older tonnage and adding newbuilds to improve the fuel efficiency and age profile of its fleet. In April, the company announced a US$405M shipbuilding contract with South Korea’s Hyundai Heavy Industries for eight MR product tankers, with deliveries spanning Q3 2028 to Q2 2029.

Mr Skov and other owners support a global framework for reducing GHG emissions from shipping. “But we have to have a path that makes sense,” said Mr Skov, during a shipping executive panel discussion at Marine Money Week in New York City on 16 June.