This month SSI Market Signal turns its attention to the IMO, where the decision due on 4 December will shape whether capital for low emission shipping is committed or left waiting.
The capital is ready but uncommitted, because the return is not yet secure. New modelling by SSI and Braemar suggests that credits alone will not secure it: pooling is likely to push the compliance price well below USD 380, leaving the lowest emission fuels modelled well above the cost of fuel oil in 2035. Investors also price the endpoint, so the trajectory needs to be fixed to 2040 and not left to a later review.
SSI’s view is that two things must survive whatever the final design: a defined funding mechanism for very low carbon fuels from the first year, and a trajectory fixed to 2040, with eligibility for any reward based on well-to-wake emissions performance, not fuel type.
This issue sets out the modelling, where the negotiations stand and what each outcome means for owners, charterers, fuel producers and financiers. .