The global shipping industry is not on track to meet its target of having zero-emission fuels account for 5% of all fuels by 2030. That’s according to a new report from the UCL Energy Institute, UN Climate Change High-Level Champions, and the Getting to Zero Coalition (a Global Maritime Forum initiative), which they hope will act as a “serious wake-up call” to the industry.
The third annual progress report, ‘Progress Towards Shipping’s 2030 Breakthrough’, warns that the majority of actors across the maritime ecosystem – which spans the five ‘system change levers’ of supply, demand, policy, finance, and civil society – are moving too slowly to meet the internationally-agreed target, with the next 12 months being critical to avoid shipping falling irreparably behind its climate goals.
Global shipping is responsible for around 3% of the world’s greenhouse gas (GHG) emissions – more than Germany – so it is a crucial sector to decarbonise. With global trade predicted to quadruple by 2050, emissions will skyrocket without urgent action. The International Maritime Organization (IMO) set a goal of ensuring that zero- or near-zero emission fuels make up 5% to 10% of all shipping fuels by 2030. The 5% target is considered the critical mass at which the infrastructure, supply chains, and technology that support zero-emission fuels mature and enable exponential growth. This means if the 5% target is not achieved, it could jeopardise the industry’s entire 2050 net-zero goal.
According to the report, production of scalable zero-emissions fuel (SZEF) currently in the pipeline could, under the more conservative scenario, end up covering less than half of the fuel needed to hit the 2030 target, while the current order book of SZEF-capable vessels would only deliver around 25% of required SZEF demand by the same year. Finance for SZEF is also now ‘off track’ – a downgrade from 2023 – due to a slowdown in funding towards SZEF-related activities and more funding going towards fossil-fuelled vessels.
“The speed at which the shipping industry adopts hydrogen-derived fuels will shape the success and the cost of this transition for decades to come,” said Dr. Domagoi Baresic, Research Fellow at the UCL Energy Institute. “Extensive adoption of such fuels by 2030 remains within reach but will require significant and immediate action by policymakers, fuel suppliers, and the shipping industry over the next 12 months. Without such action, the transition will be much longer, costlier and have a less positive environmental impact. All the ingredients for a rapid adoption already exist, but it is up to the relevant actors to make it a reality.”
Of the 35 actions required to deliver the 2030 breakthrough, just eight are considered ‘on track’, while 13 have been classed as ‘off track’ – up from eight in last year’s edition of the report. The remaining 14 are only ‘partially on track’. However, the report also stresses that meeting the goal is still achievable if action is stepped up. It points to strong progress on actions within in the ‘policy’ and ‘supply’ system change levers as examples of success, with hopes that strong GHG pricing and the fast delivery of announced production projects respectively could put both ‘on track’.
Jesse Fahnestock, Director of Decarbonisation at the Global Maritime Forum, said: “Increasing the use of zero-emission fuels is at the heart of decarbonising the shipping industry, but we are not seeing the progress required to meet our decarbonisation goals. There is no time to waste, and we must see a big shift in momentum over the next 12 months to bring our 2030 targets within reach. With such long lead times to implement policy, and finance and build vessels and energy supply chains, the window of opportunity is only open by a crack – but importantly, it is still open. This report must act as a serious wake-up call to the industry to accelerate the transformation we need to see in the sector.”
The report identifies five key ‘system change levers’ for the industry and tracks their progress towards enabling the 5% goal. These include:
• Supply (partially on track): Current SZEF production in the pipeline could cover less than half (43%) of the fuel needed by 2030 in the report’s more conservative scenario. However, there has been a significant increase in announced projects and if more come to fruition, zero-emission fuel production could surpass what is needed for the 5% target, even surpassing 10% in the most optimistic scenario.
• Demand (off track): Unless progress significantly ramps up, the current order book of SZEF-capable vessels will only deliver around 25% of the SZEF demand needed to achieve the 2030 target. However, as supply ramps up and more SZEF-ready engine options come to market, demand should grow exponentially, bringing the target within reach. Given long lead times on new vessels, urgent action is needed to bring demand back on track.
• Finance (off track): A slowdown in funding for SZEF-related activities and vessels, combined with more funding going towards conventional fossil-fuelled tonnage, means finance is now off track against the 2030 goal – a downgrade from 2023 when it was ‘partially on track’. Increases in public finance could help correct the reduction in private funding.
• Policy (partially on track): Progress has been positive at a global policy level following the 2023 IMO Strategy on Reduction of GHG Emissions from Ships. It is critical that upcoming negotiations on GHG pricing result in ambitious policies to send strong SZEF signals and push policy on track. At the national level, progress is slower, and more action is needed to develop support mechanisms for SZEF bunkering and vessel developments.
• Civil society (partially on track): The maritime industry has made good progress in improving the visibility of multiple issues that will help ensure a just and equitable transition, such as gender imbalance, lack of adequate seafarer training, and a lack of diverse voices in the fuel transition discussion. However, this now needs to translate into concrete actions leading to change.
H.E. Razan Al Mubarak, UN Climate Change High-Level Champion, said: “Limiting climate change to 1.5°C will not be possible without shipping playing its part. To align with a 1.5oC transition, the sector must intensify its efforts in a short timeframe. We hope that the findings in this report provide a practical, detailed roadmap for action to accelerate this transition and ensure it is just, benefiting workers and communities globally.”
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