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Tag: International Maritime Organization

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.

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ICS Summit kicks off Hong Kong Maritime Week

Posted on by Keith McKinley

The International Chamber of Shipping (ICS), in collaboration with the Transport and Logistics Bureau of the Government of Hong Kong, the Hong Kong Shipowners Association and the Hong Kong Maritime and Port Board, convened nearly 300 delegates from 28 countries, including ministers and senior policymakers from 12 nations, the European Commission and international organisations, with CEOs of companies from the maritime value chain, today at the Hong Kong Global Trade Summit.

With global focus on trade the Summit addressed the challenges facing maritime trade including growing political tensions, the proliferation of protectionism and the increasingly unpredictable and disruptive global landscape.

Opening the Summit, International Chamber of Shipping Chairman Emanuele Grimaldi set the scene:
“As the world recovers from the COVID pandemic this system [the global maritime transportation system] of free trade faces significant challenges due to an increasingly volatile geopolitical environment, including threats to long-standing free-trade principles and the global maritime regulatory framework. The growing pressure of geopolitical tensions, changing political dynamics and threats to traditional norms are all creating a climate of uncertainty. The urgent need to address climate change is putting food security, energy supplies and the risk to the global economy firmly on the radar.

“We also recognise that the success of our industry is intertwined with the success of nations. At a time of increasing disruption and volatility we must seek to bring greater understanding to reduce risk and support global trade. No one wins if we all lose, so we need to find ways to ensure that we can all prosper….we already have the structures and institutions to find solutions…in our rush to address problems please remember what we already have and use them, empower them to deliver for us.”

Secretary General of the International Maritime Organization (IMO), Arsenio Dominguez, provided a keynote address and reiterated the importance of collaboration and global regulations: “It is only by working and engaging with each other that we can find solutions to the risks and disruptions that arise…I emphasise here the need for cohesive global regulations. Shipping is inherently international and unilateral and regional rules can undermine the regulatory framework agreed upon at IMO…Shipping underpins world trade. Everyone depends on shipping for the things people need and want.”

Speaking on the IMO 2023 GHG strategy and the clear ambition for international shipping to reach net zero emissions by or around 2050 Dominguez added, “Member states remain strongly committed to achieving this goal. Currently mid term measures are being developed, including a GHG fuel standard and an economic pricing mechanism, which will be finalised by the end of 2050.”

Many participants at the Summit took the opportunity to highlight the plight of the Galaxy Leader crew on the almost one-year anniversary since being taken captive on the 19 November by Yemeni insurgents. It is abhorrent that seafarers were seized by such forces and that they have been kept from their families and loved ones for this long. Industry calls on States with influence to assist in this matter.

The high-profile Summit, titled ‘Risk and resilience in an age of disruption’ took place at the Hong Kong Convention and Exhibition Centre just before the official opening of Hong Kong Maritime Week. The event was expertly moderated by Former BBC Science Editor and Visiting Professor in Practice, London School of Economics, David Shukman.

Closing the Summit was a conversation between Johanna Hill, Deputy Director General of the World Trade Organization (WTO), and Shukman. The final session brought out some interesting insights and reflections. Hill said, “The shipping industry has deep pride for the work that it is doing. It’s international nature, the critical role it plays in international trade, and the well-being of its seafarers and the well-being of society as a whole…In the trade world we see shipping as an integral part of the business that we are doing, and that is why we are here today….I welcome very much the support to a free and open trading system.”

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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.”

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Shipping CEOs to Accelerate Maritime Decarbonization

Posted on by Keith McKinley

The CEOs of leading global shipping lines have issued a joint declaration at COP 28 calling for an end date for fossil-only powered newbuilds and urging the International Maritime Organization (IMO), the global regulator, to create the regulatory conditions to accelerate the transition to green fuels and maritime decarbonization.

Global temperatures are breaching critical levels, creating more frequent and devasting results. Therefore the importance of shipping achieving IMO’s 2030, 2040, and net-zero 2050 greenhouse gas (GHG) targets is very clear. The only realistic way to meet those targets for an industry that accounts for 2-3% of global GHG emissions is to transition from fossil to green fuels at scale and at pace.

Being at the forefront of introducing lower greenhouse gas (GHG) emission ships underscores the CEOs’ commitment to the IMO GHG reduction objectives for 2030, 2040, and 2050. As frontrunners, the CEOs are convinced that even closer collaboration with IMO regulators will produce the effective and concrete policy measures needed to underpin the investment within maritime shipping and its ancillary industries that will enable decarbonisation to occur at the pace required.

Their joint declaration calls for the establishment of four regulatory ‘cornerstones’:

An end date for new building of fossil fuel-only vessels and a clear GHG Intensity Standard timeline to inspire investment confidence, both for new ships and the fuel supply infrastructure needed to accelerate the energy transition.

An effective GHG pricing mechanism to make green fuel competitive with black fuel during the transition phase when both are used. This can be done by distributing the premium for the green fuels across all the fossil fuel used. With low initial volumes of green fuels any inflationary effects are minimised. The mechanism must also feature an increasing regulatory incentive to achieve deeper emissions reductions. Furthermore, beyond covering the ‘green balance fee’, revenue generated by the mechanism should go to an RD&D fund and to investments in developing countries to ensure a just transition that leaves no one behind.

A vessel pooling option for GHG regulatory compliance where the performance of a group of vessels could count instead of only that of individual ships, ensuring investments are made where they achieve the greatest GHG reduction and thereby accelerating decarbonisation across the global fleet.

A Well-to-Wake or lifecycle GHG regulatory basis to align investment decisions with climate interests and mitigate the risk of stranded assets.
In a unprecedent action, major players of the shipping industry express their shared conviction that regulation can play a key role in mitigating the cost of the green transition as well as the risk of extreme weather events. Given the cost of climate change is far greater than the cost of the green transition they look forward to being joined by other companies.

Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, said, “Climate change is a general concern not a matter of competition. The CMA CGM Group is extremely pleased to join this unique Coalition, which brings together leading shipping companies to urge to the adoption of the upper targets of the IMO trajectory. This sets an ambitious milestone for the decarbonization of our industry. By collaborating with others, we each take a new step in our energy transition, while ensuring a collective level playing field and access to greener fuels for the industry.

“This new commitment is fully in line with the CMA CGM Group’s ambition to be Net Zero by 2050. We have already invested close to $15 billion in decarbonizing our fleet, which will enable us to have almost 120 vessels capable of being powered by decarbonized fuels by 2028. Pioneer in LNG as a transition energy, our Group has also launched several large industrial partnerships to diversify our sourcing with even more decarbonized fuels. In 2023, the CMA CGM Group will reduce its CO2 emissions by around -1 million tons.

“Alongside the members of this coalition and all those who will join us afterwards, the CMA CGM Group pursues its decarbonization journey and renews its commitment to a shared and sustainable future.”

Vincent Clerc, Chief Executive Officer of A.P. Moller – Maersk, said, “A.P. Moller – Maersk wants to accelerate the green transition in shipping and logistics and a crucial next step is to introduce regulatory conditions which ensure that we create the most greenhouse gas emission reductions per invested dollar. This includes an efficient pricing mechanism to close the gap between fossil and green fuels and ensuring that the green choice is easier to make for our customers and consumers globally. The momentum for green fuel is building and we are pleased to see strong partnerships across the industry as we continue our joint efforts of making decarbonisation in shipping successful.”

Rolf Habben Jansen, Chief Executive Officer of Hapag-Lloyd, commented, “Our collective responsibility for a sustainable future and clean practices is paramount. At Hapag-Lloyd, we reaffirm our commitment to advance the decarbonization of the maritime industry and strive to be at the forefront of the energy transition. We believe that a regulatory framework and clear targets are crucial to accelerating the introduction of alternative fuels and reducing our carbon footprint. This commitment is in line with Hapag-Lloyd‘s goal of achieving a net-zero carbon fleet by 2045 and reflects our industry’s unwavering commitment to environmental responsibility.”

Soren Toft, Chief Executive Officer of MSC Mediterranean Shipping Company, added, “Shipping is at the forefront of technological innovation when it comes to decarbonization and at MSC our fleet renewal strategy includes 100 dual fuel vessels. We are proud to be part of this unprecedented collaboration with our peers and it is only right that together we follow this path towards net zero that we must achieve by 2050. The support of Governments across the world will be an essential element to reach our common goal and among those efforts we want to see an end to delivery of ships that can only run on fossil fuels. MSC has fully supported and committed to net decarbonization by 2050 but without the full support from other stakeholders particularly energy providers it will be extremely difficult to meet those objectives – no one can do this alone. Today it feels like we are one step closer in this regard, but concrete supply of alternative fuels and globally recognised GHG pricing are essential to achieve our goals.”

Lasse Kristoffersen, President and Chief Executive Officer of Wallenius Wilhelmsen, said, “At Wallenius Wilhelmsen we have decided to be a shaper of the journey to net-zero and focus our investments in supporting this ambition. Our customers want to partner with us on the voyage. Now, we need a global regulatory framework matching this ambition to drive the investments needed at a global scale.”

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