MMMCZCS outlines subsidy design options to accelerate low-emissions bunker fuels

Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping (MMMCZCS) on Tuesday (4 August) released a new publication on how to design subsidy programmes to incentivize the use of zero or near-zero (ZNZ) fuels.

Decarbonizing shipping requires a shift to low- and zero-emissions fuels, but these remain substantially more expensive than the fossil energy they replace. 

“Targeted financial support can help close that gap, but its design determines whether subsidies buy cheap near-term emissions cuts or build a future low-emissions fuel system,” it said in a social media post.

“Pursuing both aims with a single undifferentiated instrument risks achieving neither well.”

In this paper, the center focuses on the active policy debate of the International Maritime Organization’s (IMO) Net-Zero Framework (NZF) to analyze the various design options.

“If implemented, this framework currently under negotiation would be a globally binding climate regulation for shipping,” MMMCZCS added.

MMMCZCS distilled the design of a ZNZ reward program into five interlocking “variables”: eligibility, abatement benchmark, multipliers, differentiation, and reward instruments. 

In this paper, it sets out the options under each variable and examines the trade-offs across incentive strength, fiscal durability, and environmental integrity. 

Note: The full paper can be viewed here. 

Photo credit: Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping
Published: 6 August, 2026