Outcome: One third of respondents cited uncertainty in interpreting / ensuring compliance with new or complex regulations as their key worry in transitioning towards sustainable fuel sources.

Reed Smith was pleased to have recently conducted a market-wide survey on sustainable fuels, the aim being to capture the industry’s views on the opportunities and challenges presented by decarbonization in the maritime sector, in particular around the use of new fuel types.

Of particular note was the finding that one third of respondents to our survey cited uncertainty in interpreting new rules and ensuring compliance with complex regulations as their key worry in transitioning towards sustainable fuel sources.

This is a common theme. Clear, harmonized regulation is key to making any industry transition as smooth as possible, no less than with sustainable fuel. So, I am not surprised to a see a third of our respondents citing this as a key concern. 

Unfortunately, the precedents may not be good. The IMO’s Carbon Intensity Indicator (CII) has come in for sustained criticism from both vessel owners and charterers as ineffective and ill-suited to the task of measuring and ultimately reducing carbon emissions in the maritime sector. A significant review of CII is due no later than 2026. 

The way in which the EU Emissions Trading System (ETS) has been rolled out to the maritime sector has also been less than ideal in the eyes of some, with new rules being drip-fed to the market even after its commencement on 1 January 2024. Fuel EU Maritime and other environmental regulations are in the pipeline and it is important that these initiatives are introduced with clarity and certainty. The IMO may also follow suit with similar regulations governing “well to wake” fuel efficiency on a more global basis.

Survey results: This bar chart shows that 34% of respondents selected uncertainty in interpreting / ensuring compliance with new or complex regulations as their key worry in transitioning towards sustainable fuel sources, followed by finding a legal means to pass on or share costs with counterparties (25%), difficult planning and permitting processes and legal challenges to those consents (24%), lack of standardization of terms leading to greenwashing risk (14%), non-compliance with certification processes, complexity of auditing suppliers' operations in ensuring inputs are from sustainable sources (11%), and liability for experimental technologies not covered by traditional insurance products (7%). Please note that respondents were able to select more than one option.