Why a reward mechanism is neededThe shipping industry currently follows Global Fuel Intensity (GFI) targets, which measure greenhouse gas emissions relative to energy used. A dedicated reward mechanism is needed to create financial incentives that close the cost gap between conventional fuels and climate-aligned alternatives. Key elements of the reward mechanismThe effectiveness of the reward mechanism depends on two critical decisions: which fuels qualify for rewards, and how rewards are set and distributed. The mechanism must offer certainty to investors, particularly in new fuel production, by providing long-term reward structures or price guarantees. Several models are being considered to determine reward levels:Fixed Administrative Rates: Set reward amounts per unit of qualifying fuel provide predictability but may lack flexibility to respond to changing market conditions.