Chairman DiBella Statement on Net-Zero Framework

The Net-Zero Framework (NZF), currently under consideration at the International Maritime Organization (IMO), is an effort to reduce greenhouse gas emissions from ships, aiming for net-zero emissions in the maritime sector by the year 2050. In its current state, this initiative raises more questions than it answers and must be rethought before international acceptance and implementation. Specifically, any viable proposal must allow for the maximum range of alternate fuel sources, including LNG and bio-LNG.

The primary flaw in the NZF is the attempt to move shipping away from the global petroleum system by regulation rather than by the operation of ordinary market forces. Right now, the petroleum-based fuel system that the shipping industry relies on is resilient because there are many suppliers, refineries, and distribution channels. The NZF encourages the development of fuel diversity, but some proposals would limit alternate fuel sources. Attempts to artificially limit alternate fuel options available to industry will prevent the NZF from becoming an effective substitute for the current system. Fuel diversity does not necessarily equate to fuel availability, stability, and reliability. The IMO's attempt to dictate ships' use of fuel types could lead to run-away costs passed on to consumers in the U.S. and around the world.

In my view, efforts toward emissions reductions must be linked explicitly to demonstrated viability and realistic availability of alternative fuels, not a pre-determined, rigid implementation date or limited fuel options. Alternative fuels must satisfy clear, transparent and agreed-upon measures of affordability, global availability, and scalability in order to meet the needs of the shipping industry and prevent additional costs to the public. Both conventional and transitional fuels should remain in use to meet these criteria.

When the issue is framed in this way, it becomes immediately clear that conversations around emissions reductions must be expanded to include more fuel types, notably LNG and bio-LNG, which could realistically supply over 60% of global maritime fuel by 2050. Bio-LNG is a renewable alternative to LNG that is produced from organic agricultural waste. In addition to reducing carbon emissions, bio-LNG is particularly well positioned because it leverages existing LNG infrastructure, reducing costs of an entirely new fuel ecosystem and leveraging the rapidly growing global fleet of LNG-fueled vessels.

The concern that bio-LNG will inevitably become more expensive as demand for biofuels grows assumes that fuel supply remains static while demand increases. To be sure, that is not how energy markets work. A well-designed global fuel standard can create the long-term demand certainty needed to unlock new investment and expand supply-particularly in the United States. The policy challenge, therefore, is not to abandon alternative fuels because future demand may increase their price; it is to design a framework that allows supply and infrastructure investment to grow alongside demand.

The United States is the undisputed global leader in LNG exports, with capacity expected to double by 2030. Responsibly sourced, American-made bio-LNG must be recognized as a qualifying fuel domestically and internationally. The inclusion of market-proven alternative fuels, such as bio-LNG, is key to ensuring that any emissions reduction initiatives are implemented effectively for the benefit of the shipping industry and consumers.