Vitalii Protasov, Co-Founder and CEO of GENA Solutions

The CEO of green analytics firm GENA Solutions examines the impact of the one-year delay of the IMO Net-Zero Framework on renewable fuel production projects, and on future ammonia and methanol volumes available for shipping.

While it is still too early to measure the full effect of the IMO Net-Zero Framework postponement, Vitalii explains why he has no doubt that the pipeline of renewable fuel projects will be impacted, with likely cancellations and a slowdown in new projects being launched.  

He anticipates that the uncertainty around the adoption of the first GHG pricing mechanism for shipping will make shipping companies more reluctant to sign binding long-term offtake agreements, without which many project promoters will struggle to secure financing and reach a final investment decision. 

Vitalii notes that renewable methanol projects are likely to be particularly affected, as more than 80% of total global demand for the molecule was expected to come from the shipping sector before the MEPC extraordinary session. He expects a mixed picture, where projects that have already secured offtakers for their future production are likely to continue to progress, while others may require more time to attach financing or attempt to reorient their production to aviation or the chemical industry. Even though FuelEU Maritime will maintain some maritime demand and the Net-Zero Framework could still be adopted next year, he warns that some projects will ‘inevitably’ be cancelled as a result of the delay. 

He remarks that the scenario is ‘quite opposite’ for renewable ammonia projects, as only about 10% of global consumption in 2030 was expected to come from the maritime sector. While GENA Solutions has revised its projections for the renewable methanol capacity available by 2030, down from 8-14 million tonnes to 6-13 million tonnes, its predictions for ammonia capacity have remained unchanged at 5-10 million tonnes. 

Vitalii also compares prospects for renewable methanol and ammonia with other alternative fuels, such as bio-LNG and biofuels. He predicts that the delay to the Net-Zero Framework will shrink the market for all renewable fuels, but will disproportionately affect projects that require higher risks and investments, as well as long-term commitments from shipping companies. 

Finally, he reflects on the countries and regions that will be most affected by a potential slowdown in offtake agreements and rise in project cancellations, and on whether governments should jump in to bridge the gap while the fate of the global IMO regulation remains uncertain.