This study analyzes six scenarios to examine how fuel mix and total costs change when government policy intervention reduces the price of zero- and near-zero (ZNZ) fuels by 30 percent by 2035 relative to 2028 levels. The analysis evaluates the implications for fuel transition strategies in the oceangoing fleet operated by Korean companies within the IMO’s mid-term decarbonization framework.

1. Escalating Cost of Delay

   The Baseline scenario appears cost-effective in the short term, but long-term costs increase sharply as remedial unit (RU) obligations rise non-linearly. Delay costs grow faster than transition costs, creating a structural vulnerability for shipping companies. In a regulatory environment with overlapping global and regional rules, short-term cost-minimization strategies may lead to significantly higher long-term compliance costs.

2. Limitations of LNG-Centered Strategy

   LNG faces structural constraints in meeting GHG Fuel Intensity (GFI) requirements due to lifecycle emissions and methane slip. Modeling results show LNG accounts for less than 10 percent of the fuel mix across all scenarios, indicating limited long-term competitiveness.

3. Importance of Policy Support for ZNZ Fuels

   ZNZ fuels (e.g., e-fuels) scale more rapidly when regulatory pressure is combined with targeted policy support. Policies that reduce fuel prices can significantly lower total system costs by 2035. Price stability and supply chain development are critical to accelerating the fuel transition.

4. Policy Implications

   Current Korean law classifies LNG-fueled vessels as “eco-friendly,” dispersing public support across fuel pathways with different long-term decarbonization potential. Policy instruments to develop ZNZ fuel supply chains and directly incentivize their use remain limited. The speed and sustainability of maritime decarbonization will depend heavily on government policies supporting fuel price stability, supply development, and infrastructure readiness.