New net-zero emission regulations targeting older ships – modern vessels will benefit
The IMO has introduced new regulations aimed at achieving net-zero emissions for global maritime transport. These rules will have a direct financial impact on older, less efficient ships that are more carbon-intensive.
Under the new agreement, by 2028, all ships over 5,000 GT – including those in the EMF fleet and similar market segments – must use fuel that is at least 17% less carbon-intensive than the current very low sulfur fuel oil. This requirement will increase to 43% by 2035.
Carbon Credits: A Catalyst for Cleaner Maritime Transport
Older ships unable to burn low-carbon fuels like LNG or ammonia will face significant carbon costs. In contrast, modern, fuel-efficient vessels—such as EMF's Very Large Ammonia Carriers (VLAC) when operating on ammonia—could generate carbon credits, which can either be: 1) Sold to other shipowners, or 2) Retained for up to two years to offset future emissions.
This regulatory change is expected to:
- Enhance the appeal of recent dual-fuel vessels
- Speed up the scrapping of aging tonnage
-
Decrease supply and promote increased utilization across all segments
EMF's fleet is modern – geared towards a net-zero emissions future
Clarksons highlights that "the rising operational costs of VLSFO may diminish mid-cycle profits for older, less efficient ships, potentially hastening their scrapping and boosting demand for new dual-fuel constructions."
EMF's portfolio of modern and eco-efficient ships is perfectly positioned to benefit from these regulations, particularly our VLACs, which can operate with near-zero emissions when using ammonia as fuel.
Source: IMO, Clarksons, Tradewinds