International Shipping

Countries and regions making notable progress towards decarbonising shipping include: 

• As part of their multipronged strategy to reduce emissions from shipping, in 2023 the European Union reached two important agreements concerning the inclusion of shipping in the EU Emissions Trading System (ETS) and the FuelEU Maritime initiative. 
• In the United States, the Inflation Reduction Act (IRA), issued in 2022, not only includes direct support for port emissions reductions through electrification, but more importantly will greatly contribute to building out a green ammonia supply chain through its clean hydrogen tax incentives 
• At COP27 in 2022, as part of the the Green Shipping Challenge launched together with the United States, Norway announced that it will strive to reduce emissions from shipping by 50% by 2030 (compared to the 2005 level), which would require 700 low-emission and 400 zero-emission ships in Norway alone. 
• Japan, China and Korea continue to lead in designing and building ammonia-ready vessels, as well as on bunkering protocols and infrastructure.  
  

In 2022, emissions from the international shipping sector grew by 5%, continuing the rebound from the sharp decline in 2020, and are now back to 2017-2018 levels. 

Innovation is vital to ensure that zero-emission oceangoing vessels are made commercially available by the mid-2020s. Now that the IMO´s greenhouse gas (GHG) emissions targets have been made more ambitious, the stringency of existing policies, such as operational emissions intensity standards, needs to be increased accordingly to ensure significant emission reductions and to encourage the adoption of low- and zero-emission fuels and technologies for oceangoing vessels. 

Historically, oil products have constituted over 99% of total energy demand for international shipping. In 2022 biofuels met less than 0.5% of global international shipping energy demand. To get on track with the NZE Scenario, the penetration of low- and zero-emission alternative fuels, including biofuels, methanol, hydrogen, ammonia and electricity, will need to increase in this sector. By 2030, low-emission fuels represent almost 15% of total energy demand in the NZE Scenario.  

While about half of low-emission fuel use in 2030 is in the form of biofuels, which can be used in existing vessels, technological development and associated policy support will be needed to enable the use of other fuels, particularly ammonia and hydrogen, in order to reduce dependency on oil-based fuels in international shipping. This particularly concerns low-emission fuel production, transport to seaports, bunkering infrastructure and protocols, onboard storage tanks, fuel delivery system, engines and emission after-treatment. Given long vessel lifetimes and thus slow stock turnover, near-term innovation, optimisation of ship design to allow for easy retrofitting, and zero-emission technology adoption are critical to putting international shipping on an NZE Scenario pathway.  

Orders for new ships are showing a trend towards alternative fuels. A.P.Moller-Maersk, one of the biggest shipping companies in the world, announced 19 methanol dual-fuel containerships on order as of October 2022 for delivery between 2023 and 2025. These orders have been followed by others from large companies such as CMA CGM, Cosco and Cargill.  

Clarksons Research reported that in 2022, 90 (11% by tonnage) new-build orders were for ammonia-ready vessels, 43 (7%) were for methanol vessels and 3 were for hydrogen-ready vessels. 

Due to the uncertainties around the availability of low-emission fuels, many shipowners have begun to build or retrofit their fleets to include multiple-fuel vessels (such as vessels that can run on diesel and methanol). Similarly, alternative-fuel-ready (e.g. ammonia-ready) vessels provide an answer to the lack of technological readiness of engines, ship designs and bunkering protocols. Such vessels currently run on conventional fuels but would need limited technical modifications in the future to be able to run on alternative fuels. 

The Global Maritime Forum, as of May 2023, has identified over 200 pilot and demonstration projects focused on zero-emission vessel technologies. Of these, there are over 50 each on ammonia, battery and hydrogen fuel cell propulsion technologies; another 30 focusing on methanol-fuelled vessels; and around another 15 looking at hydrogen combustion. 

In November 2022 the China Classification Society issued Guidelines for Ships Using Ammonia Fuel, covering ship layout, fuel containment systems, and explosion, fire and toxicity safety. Several designs of ammonia-powered bulk carriers have recently been awarded Approval in Principle (AiP) – the first step of a ship’s certification process – by classification agencies in China, Singapore and Japan. This means that the new technology has been deemed acceptable with regards to safety. In April 2022 three members of the Castor Initiative signed a Memorandum of Understanding (MoU) to develop and construct two Very Large Crude Carriers able to run on ammonia fuel, to be launched in 2025 and 2026. 

In the same month, Ballard Power Systems announced that it has been granted the first-ever type approval for a marine fuel cell module, after extensive simulations and tests carried out in Denmark. In March 2023, the first commercial hydrogen fuel cell ferry started its final trials in San Francisco, and HAV announced that it had obtained AiP for its deck-based containerised hydrogen fuel cell system, an important step towards commercialisation. 

New fuelling infrastructure – known as bunkering in the shipping industry – will be needed to enable the use of alternative, zero-emission fuels for international shipping. 

• In November 2021 in Glasgow, clean energy solutions provider Unitrove unveiled the world’s first liquid hydrogen bunkering facility, albeit still at pre-commercial stage.  
• In 2021 there were a number of announcements of ammonia and ammonia-ready bunkering designs. These include ammonia bunkering vessels and the world’s first floating ammonia bunker terminal, which obtained AiP from a classification society in December 2022, an important first step towards commercialisation.  
• The Global Maritime Forum reports that as of May 2023 there were more than 50 bunkering infrastructure pilot and demonstration projects for hydrogen and around 50 for ammonia.  
• In April 2023 the Global Centre for Maritime Decarbonisation successfully completed the safety study for an ammonia bunkering pilot in the port of Singapore, paving the way for a trial by the end of 2023. 
• In March 2023, an agreement was reached between the European Parliament and the European Council on a new Alternative Fuel Infrastructure Regulation (AFIR), which now includes the provision of shore-side electricity at ports serving large passenger and container vessels. 

In addition to bunkering infrastructure, efforts will be needed to establish the entire fuel supply chain, including production, transport, distribution and storage.  

In July 2023, the IMO adopted a revised version of its GHG emissions strategy, which targets emissions from international shipping to reach net-zero by or around 2050 (compared to the 2018 strategy target of a 50% reduction in emissions with respect to 2008 levels). Member states agreed to “indicative checkpoints” that call for reducing total GHG emissions by 20% and striving for 30% by 2030 and 70% and striving for 80% by 2040, both relative to 2008. Emissions will now be considered on a life-cycle (or well-to-wake) basis. The next steps will be to agree on mid-term measures to meet the revised objectives, such as GHG intensity standards or a fuel levy/reward. 

In April 2023, the European Parliament adopted a reform of the EU ETS, such that emissions from the shipping sector are within scope, starting with vessels above 5 000 gross tonnage. Each company with ships trading in the European Economic Area (EEA) will be required to surrender emission allowances corresponding to a certain amount of its GHG emissions over a calendar year, starting with 40% of emissions in 2024, 70% in 2025 and 100% in 2026. The emissions will be reported and verified through the existing EU Monitoring, Reporting and Verification (MRV) system, which will be revised and extended to cover necessary GHG emissions, ship types and sizes. 

The European Commission also published a draft Delegated Act proposing a new EU Taxonomy that includes criteria to classify ships as sustainable, which would be used to label investments. The text will be finalised in June 2023 after consultations. 

In March 2023, the European Council and the European Parliament reached another provisional agreement on the FuelEU Maritime initiative, which imposes constraints on the average annual GHG intensity (on a well-to-wake basis) of onboard energy used by ships. These limits become stricter over time, starting at a 2% reduction in 2025, rising to 6% in 2030 and up to 80% in 2050, relative to the 2020 GHG intensity. The carbon intensity reduction targets have been made slightly stricter than in the earlier proposal (e.g. a reduction of 14.5% rather than 13% in 2035, and 31% rather than 26% in 2040) but there is still concern that the short-term limits are not ambitious enough and make liquefied natural gas the cheapest compliance solution. With the inherent methane leakage and technology lock-in challenges of natural gas, this could risk jeopardising the urgently needed transition to zero-emission shipping. 

In July 2022, the Clean Shipping Act of 2022 was introduced to the United States House of Representatives, which would set carbon intensity standards for marine vessel fuels. The limits in the US proposal are more stringent than those proposed in the European Union, requiring 100% zero-emission fuels from 2040. In addition, while not explicitly targeting the shipping sector, the IRA’s provision for heavy subsidises for green hydrogen production could have a significant impact on low- and zero-emission fuel supply. And in June 2023, the International Maritime Pollution Accountability Act was introduced to the US Senate, aiming to eliminate GHG emissions from shipping companies that do business with the United States.  

In December 2022, the IMO adopted the Mediterranean Sea Emission Control Area (ECA) for sulphur oxides and particulate matter, which will indirectly contribute to the abatement of CO2 emissions. The Mediterranean is home to some of the busiest maritime routes in the world, supporting 20% of seaborne trade. It will become the world’s fifth ECA. 

At the United Nations Climate Change Conference in 2022 (COP27), a number of declarations were made regarding the advancement of zero-emission shipping. One was the Green Shipping Challenge launched by the United States and Norway, which aims to put the shipping sector on a pathway commensurate with limiting global temperature rise to 1.5 °C. Under this framework, more than 40 major announcements were made by countries, ports and companies on issues such as innovations for ships, expansion in low- or zero-emission fuels, and policies to help promote the uptake of next-generation vessels.  

At COP26, in 2021, the Clydebank Declaration for green shipping corridors was signed by more than 20 countries that agreed to support the establishment of at least six zero-emission maritime routes between two or more ports by the middle of this decade. The Global Maritime Forum lists up to 21 green corridor initiatives under study, the most recent announcement being the Los Angeles-Long Beach-Singapore green and digital shipping corridor in April 2023. 

In addition, 14 countries also signed the Declaration on Zero Emission Shipping by 2050 at COP26. Signatories to this declaration pledged to push the IMO to adopt a goal of full decarbonisation of international shipping by 2050. Further, 55 countries among the most climate-vulnerable signed the Dhaka-Glasgow declaration calling on the IMO to establish a mandatory GHG levy on international shipping to align the sector with a 1.5 °C pathway. 

Announced in 2022, the Clean Energy Marine Hubs platform is expected to be officially launched at the 14th Clean Energy Ministerial in July 2023. The goal is to accelerate the production, transport and use of of low-emission fuels that will be transported by ship, making shipping an enabler of the wider energy transition. 

Given that measures to implement the revised IMO targets remain to be adopted, and that international shipping is hard for individual governments alone to regulate effectively, the private sector may play a significant role in decarbonising shipping.  

Industry players across the shipping sector (shipbuilders, operators, cargo owners, etc.) have come together under different initiatives that aim to promote shipping decarbonisation strategies.  

• Cargo Owners for Zero Emission Vessels (CoZEV), initiated by the Aspen Institute in 2021, brings together several international companies, including Amazon, with the aim of using only zero-carbon ocean freight transport by 2040.  
• Several members of CoZEV have started the Zero Emission Maritime Buyers Alliance (ZEMBA), which plans to issue a Request for Proposals in 2023 to procure maritime shipping services that achieve zero or near-zero emissions on a lifecycle basis.  
• The Getting to Zero Coalition, launched in 2019, is an alliance of now more than 160 companies with the ambition to accelerate maritime shipping decarbonisation through the development and deployment of commercially viable deep-sea zero-emission vessels by 2030, towards full decarbonisation by 2050.  
• The Poseidon Principles, first launched in 2019, and the Sea Cargo Charter, launched in 2020, provide frameworks for integrating climate considerations into lending decisions for international shipping and for aligning chartering activities with decarbonisation goals, respectively. 
  

• Dominik Engelert, the World Bank
• Torben Nørgaard, Chief Technology Officer – Energy & Fuels, Mærsk McKinney Møller Center for Zero Carbon Shipping
• Hélène Smidt, Royal Belgian Shipowners’ Association