Decarbonisation Hasn't Stopped: Korea's Shipping Choices Amid Regulatory Delay
Quantitative analysis of how Korean shipping's fuel mix and total costs shift under the IMO mid-term measure's delay, and why government policy is the decisive lever for the transition.
This report quantifies the structural risks facing Korean shipping and its decarbonization pathway under the uncertainty of a one-year delay to the IMO mid-term measure (Net-Zero Framework). Using a MILP optimization model built on roughly 870 Korean-flag oceangoing vessels (Clarksons, 2024), it compares six scenarios that combine the level of regulatory response (no action, base target, enhanced target) with a government e-fuel price-cut policy.
First, delay costs grow faster than transition costs. The no-action path looks cheapest in the short run, but RU (shortfall penalty) costs rise nonlinearly, and once they overlap with the EU ETS and FuelEU Maritime they accumulate as standing operating costs.
Second, LNG is not a sustainable transition fuel. Its well-to-wake emissions and methane slip make the GFI standard structurally hard to meet, and LNG stays around 10% or below in every scenario; e-LNG, still methane-based, carries the same lock-in risk.
Third, zero and near-zero (ZNZ) fuels scale only when regulation and policy support combine. Cutting the e-fuel price by 30% by 2035 against 2028 brings adoption forward to 2030 and up to doubles its share, lowering the base-target scenario's 2035 total cost by about 2.16 trillion won.
Ultimately the speed and durability of the transition rest with government. Current policy classifies even LNG as a "green ship," scattering resources, and offers few tools to induce direct ZNZ use. The delay is not a signal to slow down but a strategic window to prepare for tougher rules ahead, and a comprehensive package spanning e-fuel production, supply chains, port infrastructure, and green finance is the starting point.