Use of reverse auction mechanisms is key to drive a just and equitable shipping transition
- nrehmatulla
- 2 days ago
- 2 min read
London 23rd April 2026 - A briefing by Opportunity Green and UCL Shipping and Oceans Research Group collates research and case studies illustrating that a reverse auction mechanism is best suited to support the implementation of the NZF in achieving a just and equitable transition of the global shipping industry.
As the International Maritime Organization (IMO) works to finalise the details of its Net-Zero Framework (NZF) and important discussion on underpinning guidelines is how to reward the adoption of Zero- and Near-Zero (ZNZ) fuels and technologies. Currently there are two options being considered at the IMO for ZNZ reward mechanisms are: 1) a reverse auction mechanism, and 2) a fixed price defined by the IMO, discounted in the likely case of demand exceeding available funds.
Dr Tristan Smith, Professor of Energy and Transport at UCL Shipping and Oceans Research Group and delegate of the IMarEST said: “Research consistently shows that shipping will need to rapidly shift to renewable energy production and supply chains if it is to play its part in reducing emissions and slowing climate change. We cannot continue to rely on fossil fuels. Only by promoting solutions that deliver environmental, economic and social benefits will we find a way forward."
The IMarEST submission to the IMO (ISWG-GHG 21/2/13) titled, ‘Minimizing impact on States by maximizing cost-effectiveness of reaching net-zero through the use of the ZNZ reward mechanism’ argues that reverse auctions, alongside targeted support for the most promising solutions, would prevent incentives from being spread too thinly and ensure investment is focused on technologies with the greatest potential to deliver cost‑effective, scalable emissions reductions.
Well‑designed reverse auctions, such as those in South Africa and the UK, have already demonstrated their effectiveness in driving innovation in terrestrial renewable energy projects, as shown in the briefing note co-authored with Opportunity Green.
