The global shipping industry, responsible for transporting 90% of all traded goods and contributing nearly 3% of global emissions, is under increasing pressure to decarbonize. While traditionally reliant on heavy fuel oil, a shift towards greener alternatives is underway, driven by stricter regulations from bodies like the International Maritime Organization (IMO) and the EU, such as the Carbon Intensity Indicator (CII) regulations, FuelEU Maritime, and the EU ETS. However, environmentalists criticize current IMO regulations as too weak, with some arguing that loopholes could allow companies to appear more efficient without making substantial changes.
One promising avenue is the return to wind power, with shipping lines like Maersk and Cargill experimenting with rotor sails and hard sails. Maersk initially installed two 30-meter rotor sails on its tanker, the Maersk Pelican, in 2018, though it later sold the vessel after it achieved only an 8% reduction in fuel consumption. Cargill is also retrofitting a vessel with wind propulsion, aiming for it to set sail by spring. Despite wind being a free and proven technology, its adoption is hampered by uncertainty over cost savings, the variability of wind, and the significant investment required, which can take up to seven years to recoup. Experts like Erik Grundt of Rystad Energy believe wind has a clear role, especially as clean fuels face cost and toxicity concerns, but large-scale deployment is not expected before 2026 or 2027.
Investments are also surging into dual-fuel vessels capable of running on conventional fuel and cleaner alternatives like LNG, methanol, and ammonia. Over $150 billion has been invested in such vessels, with 1,126 dual-fuel container ships and vehicle carriers either delivered or on order, marking a 28% increase from the previous year. Major firms like Maersk, MOL, and CMB.Tech are committed to these fuels. Mitsui O.S.K. Lines (MOL), for instance, is transitioning to LNG-fueled vessels, aiming for 90 LNG/methanol-fueled ships by 2030, recognizing LNG's immediate availability and its ability to reduce greenhouse gas emissions by 20-30% compared to heavy fuel oil. The main hurdle for zero-carbon fuels like green ammonia and hydrogen remains the lack of scaled supply and bunkering infrastructure.
Despite these efforts, the industry faces significant challenges. The cost of installing new propulsion systems and the extensive lead times for new ship construction are deterrents. Many new ships ordered during the pandemic-driven freight boom do not feature wind propulsion systems. Analysts note that while individual companies like Maersk have committed to decarbonization by ruling out fossil fuels and natural gas, the broader industry's progress is slow, with concerns that regulations are not strong enough to drive meaningful change. The IMO's ambition to reach net-zero emissions by or around 2050 is a significant goal, but the path to achieving it remains complex and costly.
