Subscribe

Tag: Global Maritime Forum

Shipping Finance Closer to Net Zero Alignment

Posted on by Keith McKinley

Continued growth of climate transparency from financial institutions show that the global finance portfolio for shipping has moved closer to alignment with ambitious decarbonisation trajectories set by the International Maritime Organization (IMO), aiming to remove emissions from international shipping by 2050.

The new insights are revealed in The Poseidon Principles’ fifth Annual Disclosure Report, which showcases the climate alignment of 35 major financial institutions across 13 countries, representing nearly 80% of the global ship finance portfolio. The Poseidon Principles are a global framework for financial institutions to assess and disclose the climate alignment of their shipping portfolios, aiming to promote decarbonisation in the maritime industry.

This year’s report, which also marks the fifth anniversary of the Poseidon Principles, highlights the transformative progress achieved since its launch in 2019, when it became the world’s first sector-specific framework for measuring and reporting climate alignment in shipping finance. What began as a conversation in 2017 and was introduced as a concept under development at the first Global Maritime Forum Annual Summit in Hong Kong in 2018 has since evolved into a celebrated model for industry-specific, transparent climate disclosure in shipping — one that has inspired similar initiatives in sectors like steel, aluminium, and aviation.

Key findings from the 2024 Annual Disclosure Report include:

• Transparency on the rise: An average of 93.3% of signatories’ portfolio activity was reported, with all signatories reporting ship emissions data from at least 70% of their portfolio, 28 signatories achieving a reporting rate of 90% or above, and eight achieving 100%.
• Climate alignment performance: The average climate alignment scores showed a noticeable progression from last year, with portfolios’ alignment to the IMO’s ‘minimum’ and ‘striving’ decarbonisation trajectories improving.
• Increased collaboration: Collaboration and engagement are increasing between financial institutions and their shipping clients, demonstrating the initiative’s pivotal role in guiding the industry toward achieving net zero emissions by 2050 in line with the 2023 IMO Greenhouse Gas Strategy.

“The Poseidon Principles have redefined what is possible in transparent climate reporting for the shipping industry,” said Michael Parker, Poseidon Principles Chair and Chairman of Global Shipping & Logistics, Citi. “As we celebrate the fifth anniversary of this initiative, we recognise both the progress made and the opportunities ahead – this milestone shows how far we have come in five years, but also serves as a reminder that we are now five years closer to critical decarbonisation targets for 2030, 2040, and 2050. We must accelerate efforts, addressing key areas of misalignment and ensuring collective ambition turns into transformative action.”

By integrating real emissions data into financial decision-making, the framework has also enabled signatories to use climate alignment scores to shape financing decisions, guide sustainability-linked lending, and support investment in green technologies such as biofuels and alternative propulsion systems. Increased transparency has also fostered closer collaboration between financial institutions and shipowners, reinforcing a shared commitment to decarbonisation.

While celebrating significant progress, the report also acknowledges the challenges of aligning with IMO’s ambitious roadmap.

“We have much to celebrate in this annual disclosure report, especially in terms of increasing levels of transparency” said Paul Taylor, Vice Chair of the Poseidon Principles and Global Head of Maritime Industries, Societe Generale. “However, alignment with 2050 net zero goals remains a challenge, in particular for certain vessel types that are facing operational complexities. Now, the Poseidon Principles’ adoption of well-to-wake emissions reporting offers a robust foundation for addressing these challenges head on. The Poseidon Principles will continue to evolve, setting new benchmarks for transparency and commitment to a sustainable future.”

In 2023 the Poseidon Principles adopted well-to-wake emissions reporting, encompassing full lifecycle emissions of fuels and setting a new benchmark for climate reporting in line with the latest climate science and supporting the IMO’s latest ambition.

In just five years, the Poseidon Principles have set the global standard for climate transparency in ship finance and inspired other financial disclosure initiatives like the Sustainable STEEL Principles for steel financing, the Sustainable Aluminium Finance Framework for aluminium financing, and the Pegasus Guidelines for aviation financing. Climate disclosure reporting plays a crucial role in enhancing the transparency and accountability of climate and environmental impact, risk management, and strategic planning of participating organisations and their clients.

As the Poseidon Principles enter their sixth year, the Association celebrates the transformative power of collective action, and the tangible progress made toward decarbonising global shipping. While challenges remain, the shared commitment of signatories, shipping clients, and stakeholders is a testament to what can be achieved through collaboration and transparency.

similar news

Automotive and Supply Chain Specialist Releases CSR Report

 

Shipping off track to meet 5% Zero-emission Fuel Target

Posted on by David Priestman

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.”

similar news

Zero-Emission, All-Electric Home Deliveries

 

Decarbonisation of shipping could create up to four million green jobs

Posted on by Will Priestman
  • Decarbonisation of the global maritime industry could support the creation of up to four million green jobs by 2050.
  • Demand for e-fuels is set to scale to over 500m tonnes by 2040, requiring additional 2TW of renewable energy generation capacity and £3.2 trillion of infrastructure investment.
  • This significant capital investment will see most green jobs created during the 2030s, to support renewable energy capacity building.
  • Majority of jobs likely to be distributed in the Global South, where conditions are optimal for the production of green fuels.
  • Based on Green Jobs and Maritime Decarbonisation, new analysis by the Global Maritime Forum and Arup.

Copenhagen, 9 May 2024 – The Global Maritime Forum has revealed the immense economic potential presented by the decarbonisation of shipping. New analysis, commissioned by the Global Maritime Forum and conducted by Arup, projects that the maritime sector’s transition to e-fuels could support up to four million new green jobs by 2050, double the number of seafarers serving globally today. Job creation will be seen across the three main phases of the supply chain: renewable energy generation, hydrogen production and e-fuel production.

The shipping industry is currently responsible for 3% of global CO2 emissions, equivalent to the annual emissions of Japan. As the backbone of the global economy – responsible for 80% of global trade – the industry has faced enormous pressure to rapidly decarbonise. In 2023, the International Maritime Organization (IMO)’s member states agreed an end date to fossil fuel consumption “by or around” 2050.

Achieving this target will require large volumes of scalable zero emission fuels, a significant share of which will be e-fuels based on hydrogen. Projections show that shipping’s demand for e-fuels could rapidly scale to over 500 million tonnes by 2040, rising to 600 million tonnes by 2050. Meeting such demand could require an additional 2TW of renewable energy generation capacity, and 1TW of hydrogen production capacity by 2050.

Maritime transition is a trillion-dollar market opportunity

The analysis, titled Green Jobs and Maritime Decarbonisation, focuses on renewable energy and fuel production linked to e-fuels, adopting an illustrative scenario where e-fuels become the energy source for international shipping. In this scenario, up to £3.2 trillion of investment is required to support the development of renewable infrastructure, hydrogen production, and fuel production facilities for e-ammonia for shipping.

This significant capital investment will have a dramatic impact on the creation of green jobs across the supply chain. It also has the potential to create immense benefits to the wider economy, furthering climate action, whilst also supporting the development of renewable energy projects and the uptake of green hydrogen across other sectors.

Jesse Fahnestock, Director of Decarbonisation, at Global Maritime Forum, said: “This research marks a critical first step in exploring the fundamental role maritime decarbonisation will play in the creation of green jobs within the energy sector. The analysis demonstrates the sheer scale of the potential to create large numbers of highly-skilled green jobs, in this instance driven by a single fuel. Many of these jobs will also be transferable to other sectors – supporting further decarbonisation beyond shipping.”

Creating green jobs across the supply chain

Providing shipping decarbonisation keeps track with the IMO’s ‘striving indicative checkpoints’, the new data provides an outline of the growth of green jobs from the 2020s through the 2040s for each of the main areas of the supply chain – renewable energy generation, hydrogen production and e-fuel production.

Due to the rapid scaling of e-fuel uptake during the 2030s, it’s predicted that this decade will see the creation of the most green jobs across each area of the supply chain – an upper bound range of between 1m and 4m jobs worldwide. This will be supported by over £2.2 trillion of capital investment in the development renewables and infrastructure, and a huge build-out of energy and fuel capacity – 1,500GW of renewable energy generation, 800GW of green hydrogen, and 530Mtpa of green ammonia.

Job numbers are likely to be smaller in the 2020s and ultimately reduce in the 2040s, as capital investment reduces. A large proportion of these jobs, however, will be transferable to other sectors and will ultimately support the development of wider renewable energy capacity; aiding decarbonisation efforts across other sectors.

Jeremy Anderson, Director of Just Transition and Sustainable Transport at International Transport Workers’ Federation (ITF), said: “The creation of new green jobs can help address economic inequalities between the Global North and Global South. However, green jobs must also be good jobs, with decent working conditions, labour rights, and a strong voice for workers.”

More attention required to map green jobs potential in maritime 

As trillions of capital investment gets funnelled into green fuels for the maritime sector, stimulating the creation of green jobs can help countries transition away from fossil fuels, whilst providing a direct, quantifiable contribution to a country’s economy.

Investments in the Global South in particular, where climate provides the greatest conditions for e-fuel production, have shown to contribute significantly toward higher job creation, relative to an equivalent investment in a country in the Global North. This suggests a higher potential for developing countries to leverage investments towards wider green job creation.

Connor Bingham, Project Manager at Global Maritime Forum and author of Green Jobs and Maritime Decarbonisation, said: “The huge levels of investment will impact all corners of the globe, helping many countries around the world provide opportunities to workers negatively affected by the transition away from more carbon-intensive industries. It’s vital that we further explore the different geographic implications, particularly in the Global South, to ensure we can unlock the enormous potential for economic growth across nations.”

The Global Maritime Forum calls for further research and analysis on the role of other future fuels, beyond e-fuels, in the creation of quality green jobs, as well as building a stronger understanding of the different geographical implications relating to the decarbonisation of the maritime sector.

Read Similar…

Reducing Pollutant Emissions in Shipping

Subscribe

Get notified about New Episodes of our Podcast, New Magazine Issues and stay updated with our Weekly Newsletter.