The Global Centre for Maritime Decarbonisation (GCMD) and Boston Consulting Group (BCG) conducted an industry survey to take stock of shipowners and operators’ progress in establishing six elements needed for the shipping industry to reach net zero, according to BCG on Wednesday (27 September). 

The survey saw strong participation from 128 shipowners and operators across vessel types, fleet sizes and geographies, which collectively own or operate 14,000 merchant vessels, and account for USD500 billion in revenue.

The duo found high decarbonisation ambitions: Most respondents viewed net zero as a strategic priority, and 77% had already set concrete decarbonisation targets. The industry has also mobilised resources to decarbonise: respondents are investing 2% of their revenues into green initiatives, and 87% have personnel working toward green objectives.

The path to net zero for shipowners and operators requires six elements:

• A robust strategy and roadmap
• Four specific decarbonisation levers to reduce emissions: operational efficiency, technological efficiency, fuel transition, and shipboard carbon capture
• Enablers such as dedicated sustainability teams, strategic investments in green initiatives, internal carbon prices, and digitalization

While the industry has made some progress in adopting mature and cost-effective efficiency levers, adoption of complex or nascent levers remains low. Drop-in green fuels are constrained by costs and supply-side gaps, and optimism for future cleaner fuels is yet to translate into firm commitment.

The industry is now at a pivotal point, with many shipowners and operators ramping up their decarbonisation efforts. Three-quarters of respondents plan to increase investments in green initiatives. Stakeholders can build on this momentum with a variety of supportive actions. But to be effective, they need to tailor their interventions to address the specific challenges that shipowners and operators face at each stage of decarbonisation.

Three Decarbonisation Archetypes

GCMD and BCG saw three archetypes, differentiated in their outlook, investment appetite, and the challenges faced.

Frontrunners have the greatest ambitions and are willing to invest heavily. They are pushing boundaries, adopting even nascent decarbonisation levers, such as wind propulsion and air lubrication. A majority plan to pilot shipboard carbon capture solutions by 2025. Frontrunners are also planning to adopt methanol and ammonia as early as 2026 and 2029 respectively, and the availability of fuels and bunkering infrastructure will be critical to enabling adoption.

Followers believe in decarbonising their fleets, but have tighter investment thresholds and a near-term outlook. They have kept pace with Frontrunners in adopting mature and cost-effective efficiency levers, such as main engine improvements and slow steaming, but are behind in the adoption of nascent levers, such as wind propulsion and air lubrication.

Conservatives are still early in their decarbonisation journey, likely due to a lack of awareness and familiarity with the various decarbonisation levers, and the capabilities to assess and deploy them. They are best supported by measures that increase their familiarity with the levers and help contextualise them to their specific fleets and operational requirements.

The research highlights five key actions for stakeholders:

Conduct technical pilots and facilitate data sharing, especially for nascent levers

• Create innovative financing mechanisms to de-risk adoption of less mature levers
• Raise awareness, contextualize levers, and build capabilities, especially among Conservatives
• Start to build out future fuels infrastructure at ports
• Develop mechanisms to equalize and share the costs of levers across the ecosystem
• Maritime decarbonization is a complex, critical endeavor. The successful implementation of these five key actions demands a whole-of-value-chain approach. By working together, stakeholders can transform the maritime sector into a beacon of environmental stewardship, and set a course for a greener future where decarbonization and commercial success go hand in hand.

Note: The GCMD-BCG Global Maritime Decarbonisation Survey report can be downloaded here.

Photo credit: Venti Views on Unsplash
Published: 28 September, 2023