Decarbonisation Technology February 2026 Issue

Annual compounded growth rate (ACGR) for transitional fuel scenarios

LNG

Other transitional fuels

Scenario Base case

Uptake 2028 (%)

ACGR

Uptake 2028 (%)

ACGR

8 7 9 9

5 2

2 1 2

TFs discouraged TFs encouraged

10 12

15 20

TFs strongly encouraged

2.5

Table 2

sulphur fuel oil (VLSFO), light fuel oil (LFO), and marine gas oil (MGO) based on the data from the 2024 IMO LCA Guidelines. These guidelines do not include Well-to-Tank data for LNG and, therefore, the data from Annex II of the FuelEU Maritime regulation has served as reference. A value of 80g CO2e/MJ has been used, aiming to be representative of the mix of engine technologies that have been used so far and accounting for some pilot fuel use. Given the importance of controlling methane slip, new LNG-fuelled ships joining the fleet should be expected to use state-of-the-art methane slip reduction technologies. Other transitional fuels could be biofuel blends or blue fuels, such as blue ammonia and blue methanol. An average GFI value of 60g CO 2e/ MJ has been used to represent this category of fuels. A precise definition of ZNZ fuels is not yet available. Under the proposed NZF, all fuels with a GFI footprint below 19g CO 2e/MJ should qualify, provided they meet the sustainability criteria, yet to be defined. Fuels such as green ammonia, green methanol, HVO, bio-methane, and synthetic methane should all qualify. An average footprint of 10g CO 2eq/MJ has been used to represent ZNZ fuels. Table 1 provides an overview of the fuels used in this modelling exercise, with their assumed GFI. Starting from today’s fuel mix, a base scenario for transitional fuels that assumes continued growth of LNG at the rate of just 5% per year has been developed. This reflects the fact that the NZF, as currently proposed, does not provide a strong incentive for the use of LNG. For other transitional fuels, it is assumed that they achieve 2% in 2028 and grow by 10% per year. Further scenarios with more or less growth in transitional fuels were developed, including one without any transitional fuels at all, to illustrate

the contribution of transitional fuels in reaching the NZF’s Base Target. Assumptions for each scenario are summarised in Table 2 . It is to be noted that the scenario assumptions used are purely hypothetical for the purpose of illustrating the role transitional fuels may play. More detailed economic analysis would be needed to define the regulatory measures that would allow the penetration levels of transitional fuels used in these scenarios to be reached. Such analysis is beyond the scope of this thought exercise. For each scenario, the amount of ZNZ uptake needed to reach the Base Targets included in the proposed NZF up to 2040 has been calculated. The results are shown in Figure 2 . By 2030, the difference between discouraging and encouraging scenarios represents an additional 2% in ZNZ uptake. While this may not sound very large, it represents an increase from the base case of 5% to 7%, which is significant given the short lead time between now and 2030 and the remaining uncertainty about the incentives for ZNZs in the absence of details on the reward. By 2039, the difference

100.0% 70.0% 80.0% 90.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0%

ZNZ uptake (%)

LNG (%) Fuel oils (%) B30 (%)

Figure 3 Fuel mix scenario with strongly encouraged transitional fuels, meeting the NZF Base Target trajectory