Experts agree that the shipping industry must decarbonise swiftly to keep global temperature increases below 1.5°C, transitioning to green fuels instead of the highly polluting diesel that powers most vessels today. The Intergovernmental Panel on Climate Change (IPCC) has outlined that to meet this goal, global emissions must peak by 2025, halve by 2030, and reach net-zero by 2050. Currently responsible for about 3% of global emissions, shipping generates nearly 1 billion tonnes of CO2 and other greenhouse gases annually. If shipping were a country, it would be the sixth largest polluter in the world.
Without more aggressive measures, emissions from the shipping sector will remain high, potentially reaching 90-130% of 2008 levels by 2050. Despite its substantial environmental impact, the International Maritime Organization (IMO), the UN body responsible for regulating shipping, has yet to impose meaningful restrictions to reduce emissions or encourage sustainable practices. However, progress is beginning to emerge as some governments and industry players develop alternative fuels and initiatives to drive change. Methanol, ammonia, and hydrogen are being explored as possible solutions, but concerns persist regarding their readiness for widespread use, potential environmental impacts, and the trade-offs involved in adopting them.
The European Union is taking an active role in tackling shipping emissions through a series of new regulations aimed at decarbonising the industry in the coming years. One such regulation is a sustainable fuel mandate, which sets specific targets for reducing the carbon intensity of fuels over time. Another significant move is the inclusion of maritime emissions in the EU’s emissions trading scheme (ETS), which will require all ships entering or leaving EU ports to pay for their emissions starting in 2023. The FuelEU Maritime initiative is another effort to encourage the use of low-carbon and renewable fuels. However, environmental groups argue that this initiative is insufficient and may even promote the use of liquefied natural gas (LNG), which releases methane, a potent greenhouse gas. Critics warn that these policies could create stranded assets and fail to provide the necessary incentives for long-term, scalable green solutions like hydrogen-based fuels.
Compagnie Maritime Belge (CMB) is one of the companies supporting hydrogen as the future fuel for shipping. The Belgium-based company already operates three hydrogen-powered vessels, including the world’s first hydrogen-powered tugboat, and is constructing several large ships that will run on ammonia. CMB’s goal is to have all its ships be low or zero-carbon by 2030. For this to happen, renewable energy must become more accessible and cost-effective for producing zero-carbon fuels, while carbon emissions need to be more heavily taxed. CMB is investing in hydrogen for shorter routes and ammonia for international voyages, with the latter seen as the more viable option for long-distance cargo transport. Ammonia, however, presents challenges as its production is currently energy-intensive and its combustion releases harmful nitrogen oxides (NOx), which require additional technology to mitigate.
Ammonia’s environmental risks are also significant. Freda Fung, a consultant focused on shipping decarbonisation, emphasises the fuel’s toxicity, stating that an ammonia spill could be catastrophic for marine ecosystems. Nonetheless, Tristan Smith, an expert at University College London, argues that these risks are manageable given the existing infrastructure for storing and transporting ammonia. Methanol, another alternative fuel, offers a more immediate solution. It is cheaper to implement on existing ships and is easier to store and handle than ammonia. Maersk, a major player in the shipping industry, has committed to using green methanol in its fleet to meet its 2040 net-zero target. The company plans to operate 12 methanol-powered vessels, which are expected to reduce its annual CO2 emissions by 1.5 million tonnes.
Engine manufacturers like Swiss company WinGD are also adapting to the changing landscape, designing engines that can run on both methanol and ammonia. WinGD’s strategy aims to provide flexibility as the industry transitions from diesel to alternative fuels. Although methanol has fewer environmental risks than ammonia and is biodegradable in water, many experts believe it is not the ideal long-term solution for decarbonising shipping. Producing methanol requires capturing CO2, an inefficient and costly process. Critics argue that relying on carbon capture is not a sustainable way to reduce emissions.
China, the world’s largest shipbuilder, is already building methanol-powered ships and conducting sea trials. As the global shipping leader, the country stands to benefit from leading the transition to green fuels, but much of the momentum will depend on international regulations, particularly from the EU and the IMO. Domestic efforts to clean up shipping could also help China achieve its 2060 net-zero target.
Massive investment is needed to scale up the production of zero-carbon fuels like hydrogen and ammonia. Renewable energy capacity, particularly from wind and solar, must be significantly increased to meet the demand. Current production of renewable methanol is minimal, and ammonia is still largely produced using fossil fuels. Countries like Australia are making headway, with plans to build 40 gigawatts of electrolyser capacity by 2030, much of it located near major ports. However, building the necessary infrastructure for green fuels will take decades, and significant demand must exist before investors will commit the necessary resources to develop these technologies.
While efforts to decarbonise the shipping industry are underway, the scale and speed of change required are immense. Significant investments in renewable energy and zero-carbon fuels are critical if the sector is to meet global climate targets. The transition will be challenging, with many trade-offs along the way, but a greener shipping industry is essential for a sustainable future.
Quadrise plc (LON:QED) is an energy technology provider whose solutions enable production of cheaper, cleaner, simpler and safer alternatives to fuel oil and biofuels, proven in real world applications. Quadrise technologies produce transition fuels called MSAR® and bioMSAR™, which allow clients in the shipping, utilities and industrial sectors to reduce carbon emissions whilst also saving costs.
