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aritime transport contributes approximately 3 percent of global manmade greenhouse gases (GHGs): roughly one gigatons of CO2 equivalent (CO2eq).  Shipping is the most cost-effective method of transporting goods, facilitating about 90 percent of global trade. The sector is vital to the global economy. However, the same factors that make shipping economically efficient – high dependency on fossil fuels characterized by high energy density, slow fleet turnover, and international competition – make it one of the toughest sectors to decarbonize.

According to DNV, 93 percent of fuels used in operational ships are fossil in origin.  Other than Liquefied Natural Gas (LNG), the sector has been slow to adopt alternative fuels due to higher production costs and insufficient transport and storage infrastructure. Fleet turnover times are slow in a sector as capital-intensive as this one, typically 20 to 30 years. And as a globally interconnected sector, companies face stiff international competition, leaving them loathe to pass additional costs for deploying alternative marine fuels on to customers.

Despite efforts to improve fuel efficiency, emissions from the maritime sector are increasing. To address this concern, new policies are being developed at international, regional, and port level. Here we explore what the International Maritime Organization (IMO), the European Union (EU), and the port authorities of Singapore are doing to help decarbonize maritime transport.

 

A Global Look 

In 2023, the IMO, the primary regulator of the shipping sector, adopted a revised decarbonization strategy targeting net-zero greenhouse gas (GHG) emissions from international shipping by around 2050. This strategy includes indicative targets for 2030 and 2040, along with measures to reduce carbon intensity and promote the adoption of low-emission technologies. To achieve these targets, the strategy proposes a combination of short-, mid-, and long-term measures. The short-term policies, which took effect in November 2022, include technical and operational actions to improve the energy efficiency of ships, such as reducing ship speed. However, these measures alone are insufficient to achieve the net-zero target, which necessitates the large-scale deployment of alternative marine fuels. Consequently, the IMO is currently discussing mid-term measures that involve two key components: a GHG intensity standard for marine fuels and a maritime GHG emissions pricing mechanism.

 

 

 

 

These measures are expected to be adopted in 2025 and implemented by mid-2027. The latest meeting of the IMO’s Marine Environment Protection Committee (MEPC 81), held in March 2024, did not result in a breakthrough, as member countries have differing views on how these policies should be formulated. Negotiations will continue at the next MEPC meeting in October 2024. The slow pace of progress has prompted some regions, like the European Union, to advance with their own regional measures to decarbonize maritime transport.

 

Looking West

The EU aims to achieve a 55 percent reduction in GHG emissions below 1990 levels by 2030 and climate neutrality by 2050. Domestic shipping accounts for 3-4 percent of total EU GHG emissions, making it essential to reduce shipping emissions to meet the Union’s climate objectives.

As of 2024, maritime transport emissions were incorporated under the European Union’s cap-and-trade program – the Emissions Trading System (EU ETS).  As a result, shipping companies using European ports must monitor and report their emissions and purchase and surrender EU allowances (EUAs) for each ton of reported carbon dioxide (CO2) emissions. However, the surrender obligations for the maritime sector are being phased in gradually: 40 percent of allowances must be surrendered in 2025 (covering 40 percent of emissions reported in 2024), 70 percent in 2026, and 100 percent from 2027 onwards. Starting January 1, 2026, this obligation will extend to two short-lived GHGs—methane (CH4) and nitrous oxide (N2O). Additionally, 20 million allowances by 2030 (approximately €1.6 billion at €80 per allowance) have been earmarked through the Innovation Fund to support the sector’s decarbonization.

The EU ETS is expected to increase the cost of using fossil fuels but does not directly promote the adoption of alternative fuels. This gap will be partly addressed by the FuelEU Maritime Regulation, which will come into force in 2025. The FuelEU regulation sets maximum thresholds for the annual average greenhouse gas (GHG) intensity of energy used on board large ships (over 5,000 gross tonnage) calling at European ports, regardless of their flag. These objectives aim to ensure a gradual reduction in the GHG intensity of marine fuels, targeting a 2 percent reduction by 2025 and escalating to an 80 percent decrease by 2050. The targets cover three GHGs included in the EU ETS—CO2, methane, and nitrous oxide—across the entire lifecycle of the fuels used onboard.

Ships can comply with the FuelEU regulation by using sustainable maritime fuels, such as advanced biofuels, and synthetic maritime fuels, like renewable fuels of non-biological origin (RFNBOs), including low-carbon hydrogen. The EU’s approach is not entirely technology-neutral, as RFNBOs will be double-counted to encourage early adoption. Despite these regional efforts, the EU ETS and FuelEU Maritime are unlikely to create price parity between conventional and alternative marine fuels by 2030. This situation has prompted prime movers, such as the port of Singapore, to launch their own policies in closer cooperation with the shipping industry.

 

Looking East

Singapore is a major international shipping hub, the world’s second-largest container port after Shanghai, and the world’s largest bunkering hub, ahead of Rotterdam. In 2022, the Maritime and Port Authority of Singapore (MPA) developed the Maritime Singapore Decarbonization Blueprint in consultation with industry stakeholders. The Blueprint is a comprehensive roadmap to achieve net-zero emissions by 2050, outlining seven focus areas.

 

 

 

 

 

The first four areas focus on infrastructure and operational issues, setting specific targets: Decarbonization of port terminals (60 percent GHG reduction by 2030 compared to 2005 levels). Domestic harbor craft (15 percent GHG reduction from 2021 levels by 2030 and 50 percent GHG reduction from 2030 levels by 2050). Promotion of future marine fuels (biofuels, methanol, ammonia, and potentially hydrogen), along with bunkering standards and infrastructure. The Singapore Registry of Ships (SRS), with a goal for 50 percent of the fleet to be recognized as “green” by 2050. The other three areas focus on governance and coordination: Support for standard-setting initiatives at the IMO and other international forums. Research and development, and talent promotion. Support for carbon awareness and accounting, alongside green financing.

The MPA also committed additional funds to support these initiatives – at least $300 million – tripling the funding available under its predecessor – the Maritime Singapore Green Initiative (MSGI), which had been launched in 2011 to reduce the environmental impact of shipping. 

Singapore is also engaged in the Green Shipping Corridor framework. It established Green and Digital Shipping Corridors with the Port of Rotterdam in 2022 and with Australia in 2024. While the concept is not entirely new, Song et al. suggest that the Green Shipping Corridor represents a new paradigm in promoting the shipping sector. If well-implemented, these initiatives could enable the development of financial models to transfer the additional costs from carriers to consumers and provide a blueprint for sharing the costs and risks across the value chain.

 

 

Looking Ahead

The diversity of initiatives worldwide highlights the absence of a one-size-fits-all solution for decarbonizing shipping. However, collective actions focused on reducing demand, increasing investments, and advancing alternative fuels and associated infrastructure demonstrate progress in addressing this challenge. Maritime transport appears to be more advanced on the decarbonization pathway than other hard-to-abate sectors, offering valuable lessons learned. First, to be credible, the decarbonization strategy needs to be comprehensive, focusing not only on the transition from fossil to alternative fuels but also on the necessary infrastructure, governance, and social changes. Second, as there is no favored alternative fuel and technologies are evolving rapidly, the near-term future of shipping is likely to be multi-fuel. Third, the decarbonization of shipping fosters the creation of new partnerships across different stakeholders and value chains. The shipping industry understands well that it will take all hands on deck to decarbonize maritime transport.