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The shipping industry has often been seen as one of the hardest sectors to decarbonize. Despite accounting for roughly 3% of global greenhouse gas (GHG) emissions, the sector’s vital role in global trade presents unique challenges in balancing environmental responsibility with economic efficiency. Nonetheless, last month at OrbitMI FLOW, David Wallace-Wells spoke admiringly about the shipping industry and its efforts to decarbonize.
He noted that shipping was an under-reported success story:
"I think shipping has basically not been paid attention to by the public as a carbon challenge. They have much more focused on aviation because it signals something about wealth and conspicuous consumption, whereas the shipping industry looks like how I get my stuff at the supermarket. And so we're not going to judge, but it's possible that the cultural politics there will shift as we get a more informed public. I would like to think that that public will also understand everything that's already being done in the shipping industry farther along, I think considerably farther along than aviation and understand that especially the remarkable public commitments at the global level, which are personally I think put most ambitious countries to shame."
For those of us in the audience, Wells's comments let us puff up our chests in pride. Look at how well maritime is doing.
Then, the report came out. While recent years have shown some progress, the industry is not on track to meet its critical decarbonization goals.
In 2023, the International Maritime Organization (IMO) set an ambitious target for zero- or near-zero emission fuels to make up 5% to 10% of all shipping fuels by 2030. However, a joint study by the UCL Energy Institute, UN Climate Change High-Level Champions, and the Getting to Zero Coalition warns that the industry is falling behind.
Out of 35 required actions to achieve the 2030 target, only eight are currently considered “on track.” Another 13 are classified as “off track,” while the remaining 14 are only “partially on track.” These shortcomings put the shipping industry’s decarbonization efforts at significant risk, with critical gaps in both fuel production and adoption.
The report highlights a major bottleneck in the production of scalable zero-emission fuels like ammonia and methanol. Current projects are expected to supply less than half of the fuel needed to meet the 2030 target, raising serious questions about scalability. Safety concerns with ammonia and the competitiveness of methanol further add to the uncertainty.
Adding to the challenge, the number of vessels capable of using these fuels is insufficient. The current order book for such vessels is projected to meet just 25% of the required demand by 2030.
Industry leaders point to a “vicious cycle” stalling progress. Green fuel producers hesitate to invest without clear demand, while potential buyers are unwilling to commit without reliable supply. Political intervention and financial incentives are urgently needed to break this stalemate.
The study also warns of a slowdown in funding for decarbonization efforts, with more investments flowing toward fossil-fueled vessels. This has left the industry without the financial momentum needed to accelerate the adoption of green technologies.
Regulatory uncertainty compounds these challenges. With the IMO set to announce new regulations next year, many companies are hesitant to commit to specific fuels or technologies without clearer guidance. According to Jesse Fahnestock, director of decarbonization at the Global Maritime Forum, regulatory clarity could spark a rapid increase in new vessel orders designed for future fuel compatibility.
Despite the setbacks, there are reasons for optimism. Industry leaders like Stefano Sommadossi of NatPower Marine emphasize the potential of electrification, which he claims is suitable for 80% of business cases. Collaborative initiatives, such as green shipping corridors, could act as catalysts for industry-wide action. For instance, the partnership between NatPower Marine and Peel Ports aims to establish the first green shipping corridor between the UK and Ireland.
Technological readiness is another positive factor. The technology for green fuels exists, stronger financial incentives are needed to enable widespread adoption. One industry expert estimates that green fuels could achieve cost parity with fossil fuels by around 2035, particularly in regions with stringent regulations like the EU.
The shipping industry stands at a critical juncture. As the report underscores, the next 12 months will be pivotal in determining whether shipping can realign with its climate goals. Breaking the current cycle of inaction will require bold political intervention, increased investment, and stronger collaboration across the industry.
While shipping has made strides in areas like fuel efficiency and alternative energy, the path to full decarbonization remains fraught with challenges. Now is the time for the industry to transition from ambition to implementation, ensuring that it remains a leader in climate action rather than a sector falling behind.
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