BIOFUELS are usually dismissed as a short-term option on the journey to net zero, since there won’t be enough of them to go round.

Yet the unsexy work of classifying, certifying and verifying their various green credentials goes on at the IMO, where lobbyists increasingly talk up ethanol’s potential as ship fuel.

There are a few reasons to pay attention to the various barriers in the way of fuels such as ethanol and methanol, besides the obvious one.

Let’s imagine, for a moment, that the next MEPC meeting results in a global GHG emissions regulation being rejected, de-fanged or simply delayed again.

If the response is regional carbon taxes, as many predict it will be, then shipmanagement will become a matter of using different fuels depending on where in the world you are sailing.

Hydrogen-based e-fuels will never be viable without regulation, and could still struggle even with it. LNG is a fossil fuel, and is already incurring green taxes in the EU. Carbon capture is at best a long shot and at worst a scam.

That leaves biofuels, and the difficult questions about which ones are OK and which aren’t.

Certifying, verifying and crediting the right kinds of biofuels to avoid triggering deforestation will involve trade-offs. Yet without common standards to aim for, they will be difficult to make at scale.

There will be potential for fraud, environmental destruction and engine trouble. But there will also be opportunities to profit from regulatory arbitrage.

Regulations also have a way of falling into place once a fuel is known to be cheap and available.

The industry will have to take what green fuels it can get. But without common rules, the result will not be a clean transition so much as a new market in regulatory arbitrage.

Shipping’s fuel mix will be determined port by port and voyage by voyage, according to what is available, affordable and recognised by the regulator collecting the carbon bill. The winners will not necessarily be those offering the greenest fuel, but those able to prove their product is green enough, in the right market, at the right price.

That makes the obscure work of classification and certification commercially decisive. The fine print will determine which fuels scale, which investments pay off and who profits from the disruption.

Declan Bush
Senior reporter, Lloyd’s List 

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