Shipping Industry's Shift to Alternative Fuels Exposes Liability Gap
The shipping industry's shift towards alternative fuels has highlighted a gap in international maritime law. While over 1700 vessels with alternative fuel propulsion were ordered in 2024, current conventions do not adequately protect against spills or leaks of these new substances. This leaves the industry without clear liability and compensation rules for damages caused by these fuels.
Existing conventions like the 1969 Civil Liability Convention (CLC) and the 1971 Fund Convention were designed for fossil fuels and do not cover alternative fuels like hydrogen, biodiesel, methanol, ammonia, or liquefied natural gas (LNG). These fuels behave differently and can generate byproducts with significant global warming potential, posing unique risks.
The Hazardous and Noxious Substances (HNS) Convention was intended to address these concerns but has not entered into force due to burdensome reporting requirements. In the absence of a dedicated regime, claims for damage would be subject to uncertain national procedures. The International Maritime Organization (IMO) is reviewing these liability gaps and considering a new component under the IMO Net-Zero Fund for alternative fuels. However, until a regime is established, regulatory loopholes could arise, as alternative fuels like advanced biofuels, LNG, LPG, ammonia, and methanol are already being discussed and used in shipping.
The rapid adoption of alternative fuels in the shipping industry has exposed a need for updated liability and compensation rules. The IMO's review of liability gaps for alternative fuels is a crucial step towards filling this regulatory gap and ensuring the safe and sustainable use of these new energy sources in shipping.
