India’s maritime sector serves as the backbone of its trade and commerce, handling around 95% of the country’s EXIM trade by volume and about 70% by value. However, this vital industry runs on conventional hydrocarbon fuels, leading to greenhouse gas emissions and other harmful emissions.
The International Maritime Organization (IMO), the United Nation’s specialized agency regulating International Shipping, has over the last decade adopted several technical and operational measures to regulate and reduce GHG emissions from ships such as Energy Efficiency Design Index (EEDI) for new ships & Energy Efficiency Existing Ship Index (EEXI) for existing ships and Ship Energy Efficiency Management Plan (SEEMP) & the Carbon Intensity Indicator (CII). In 2023, the IMO published a revised GHG reduction strategy which set the target of achieving net zero GHG emissions from International Shipping by and around 2050.
In April this year, the IMO approved the Net-Zero framework regulations (NZF) mandating progressive reduction in the lifecycle carbon intensity of fuels used by ships above 5,000 GT and engaged in international voyages. It includes a GHG Fuel Intensity (GFI) compliance approach, a metric representing the amount of carbon di oxide equivalent emitted per unit of energy of the fuel used (measured in grams of CO2 equivalent emitted per mega joule of energy). The IMO’s GFI compliance approach is a two-tiered metric and the ships will have to pay a price in the form of a contribution to the IMO’s Net-Zero Fund in case the attained GFI of the fuel used in the particular year is more than respective two-tiered targets defined for that year. The pricing contribution for non-compliance is respectively USD 380 per tonne of CO2 equivalent for the base target and USD 100 per tonne of CO2 equivalent for the direct compliance target, each evaluated individually. The IMO is likely to adopt the NZF regulations in October 2025 and which will be effective from 2028. The aforesaid market-based measures will inevitably increase the cost of maritime transportation until supplies of compliant fuels at competitive prices are available.
Meanwhile, the European Union (EU) have already enforced strict climate rules like ETS (Emission trading system) regulation and FuelEU Maritime regulation for shipping to and from EU ports. The EU ETS is a market-based system requiring ships to purchase emission allowances equal to 70% of their total CO2 emissions in 2025 and equal to their total (100%) CO₂ emissions from 2026, while FuelEU Maritime is a regulatory measure similar to the IMO’s Greenhouse Gas Fuel Intensity (GFI) metric, however with a single-tier GHG intensity reduction trajectory that mandates a progressive reduction of GHG intensity of the fuels used.
To comply with the GFI metrics, ships will switch to use of appropriate fuels such as biofuels in the interim and eventually to zero and near-zero emission fuels (ZNZ) such as Green Methanol and Green Ammonia. Marine propulsion and auxiliary engines and marine boilers are available and also under development for use of these alternate fuels.
In what appears as a challenge is, in fact, a major opportunity for India. With abundant solar and wind resources, the country can produce large amounts of green hydrogen using renewable energy. This hydrogen can be synthesised into green methanol or green ammonia. With this, India can emerge as a key producer supplier and exporter of green fuels.
The National Green Hydrogen Mission of the Government of India has designated the Deendayal Port Authority (Kandla), V.O. Chidambaranar Port Authority (Tuticorin), and Paradip Port Authority (Paradip) as initial green hydrogen hubs for installation of facilities for production of green hydrogen and its derivatives such as methanol and ammonia. Many similar mega projects have been announced in the private sector. These projects are laying the foundation for India to emerge as clean energy production and export hub of the future.
Training and skilling seafarers are equally essential to ensure safe handling of these new fuels. The IMO is in the process of developing model courses on safe handling of Green Methanol and Green Ammonia onboard ships.
With the entry into force of the IMO’s Net Zero framework regulations and the eventual transition to the use of Zero/ near-zero (ZNZ) fuels, significant global demand for such fuels will emerge. With the investments in green fuel production, bunkering infrastructure and logistics supply chain the demand for such fuels from international Shipping can be fulfilled and India can carve out a strong competitive position as a green fuel producer / supplier. Linked with the AmritKaal Vision 2047, this journey will ensure a more sustainable future while aligning with India’s broader net-zero ambitions.
Marex Media
The Author
Mr Vikram Dingley
Director (Technical & Offshore Services)
The Shipping Corporation of India Limited