The leader of the global shipping regulatory body has stated that the sector needs to increase efforts to reduce carbon emissions

For many years, the global shipping sector has faced criticism for its minimal advancements in reducing the carbon emissions generated from the fuels used by ships transporting everyday cargo like food, vehicles, and clothing. Recently, the newly appointed head of the International Maritime Organization (IMO), responsible for regulating international shipping, has subtly criticized this inaction and is encouraging companies to increase their efforts. "There is still more that can be achieved," stated Arsenio Dominguez, who spoke in-depth during the Hamburg Sustainability Conference in Germany this week. "There are easily attainable solutions available."

Dominguez, who assumed the role of secretary-general at the start of this year, emphasized the importance of utilizing satellites to optimize shipping routes based on weather conditions, which can reduce fuel consumption, as well as cleaning ship hulls to lessen water resistance and adopting slower speeds—commonly referred to as slow steaming— to decrease fuel usage and emissions.

While acknowledging that many companies are striving to lower greenhouse gas emissions, which contribute to climate change, Dominguez noted that reaching the IMO's objective of a 30% reduction in emissions by 2030 necessitates immediate action on all fronts.

A focus on ship fuel sources

Significant decarbonization efforts will ultimately require a transformation in the fuels powering ships, a point of consensus among industry leaders. Presently, the majority of vessels rely on heavy fuel oil, which emits carbon dioxide along with sulfur, nitrogen, and other pollutants. Cleaner fuel alternatives are available and more are under development, including hydrogen, ammonia, and biofuels. However, these options tend to be more costly, not yet produced at scale, and are only environmentally friendly when created using sustainable methods. For instance, hydrogen can be produced from water and renewable energy through electrolysis, resulting in what is known as "green" hydrogen. Yet, the vast majority of hydrogen today is derived from methane using steam-methane reforming, a process that emits carbon dioxide.

When asked about the primary challenges to decarbonization during a panel at the sustainability conference, Bud Darr, executive vice president for maritime policy and government affairs for MSC Mediterranean Shipping Company, replied, "Fuels, fuels, fuels." He emphasized the necessity for a significant expansion in both fuel production and shore-side infrastructure to support the new generation of ships and equipment being invested in.

At present, the shipping industry contributes roughly 3% of global greenhouse gas emissions, with projections indicating that their total emissions could rise sharply in the coming decades unless substantial changes are implemented. Other sectors of the global economy, such as electricity and ground transportation, have made progress in decarbonization through electrification, but the shipping industry has lagged behind.

"The IMO has been quite slow," noted Bastien Bonnet-Cantalloube, a shipping and aviation decarbonization expert with the non-profit organization Carbon Market Watch. "There has been no progress for 10 to 15 years, but now things are beginning to accelerate."

Last year, the IMO established a target of achieving net-zero emissions by around 2050, a goal that could serve as a catalyst while also highlighting the significant distance the industry must still cover.

The IMO is facing pressure to implement a carbon tax, in part to align with initiatives already underway in some regions, such as the European Union. As of this year, large vessels entering and exiting European ports are subject to taxes on their carbon dioxide emissions, and beginning in 2026, they will also incur fees for emissions of methane and nitrous oxide. Some industry leaders are advocating for a carbon levy from the IMO, which could function as the world's first global carbon tax, allowing shipping companies to pay a single carbon tax rather than managing taxes across various jurisdictions.

However, there remains considerable disagreement among countries and shipping companies regarding the proposed tax, including its amount and the intended use of generated revenue.

IMO heading towards significant decisions next year

Earlier this month, during meetings in London, the IMO's Marine Environment Protection Committee continued to draft proposals aimed at phasing in cleaner fuels and establishing a greenhouse gas pricing mechanism. However, the specific outcomes of these principles remain uncertain.

"I hesitate to refer to it as a tax, although that is how it is often described," Dominguez stated, reflecting the sensitivity surrounding the topic. He noted that delegates from IMO member countries were exploring various scenarios for evaluating the carbon efficiency of ships, setting fuel standards, and collecting revenue from emissions.

The committee will reconvene in April, where it is anticipated that the measures will be approved. Formal adoption is expected to occur in the fall, with implementation not scheduled until 2027, allowing countries and companies time to adapt.

In the interim, Dominguez emphasized the necessity for shipping companies to do everything within their power to reduce emissions, which, for some, includes utilizing liquid natural gas (LNG) as a fuel source. He indicated that engine manufacturers have demonstrated that using LNG in engines can enhance efficiency, thereby lowering emissions.

"If we cease using LNG now without a viable alternative, we would revert to square one," he remarked, acknowledging the divisive nature of the issue. Scientific studies have indicated that methane leaks from LNG, a potent greenhouse gas, could negate any benefits derived from cleaner burning compared to other fossil fuels. Environmental advocates have long contended that relying on LNG merely enables major oil and gas companies to maintain the status quo, thereby delaying a significant transition to renewable energy sources.