Net-zero goal at risk as shipping falls short of green fuel target by 2030, report warns

The global shipping industry is not on track to meet the target of having zero-emission fuels account for 5% of all fuels by 2030, jeopardizing its ambition of hitting net-zero emissions by 2050, a new report shows.

The third annual progress report “Progress Towards Shipping’s 2030 Breakthrough” warns that the majority of actors across the maritime ecosystem 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.

The new report was issued by the UCL Energy Institute, UN Climate Change High-Level Champions, and the Getting to Zero Coalition (a Global Maritime Forum initiative).

The International Maritime Organization (IMO) has established a goal for zero- or near-zero emission fuels to account for 5% to 10% of all shipping fuels by 2030. Achieving the 5% target is crucial, as it represents the critical mass needed for the infrastructure, supply chains, and technology supporting zero-emission fuels to develop and expand rapidly. Failure to meet this 5% target could jeopardize the industry’s overarching goal of reaching net-zero emissions by 2050, the researchers note.

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-fueled 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,” Domagoj Baresic, Research Fellow at the UCL Energy Institute, said.

“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.”

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.

Razan Al Mubarak, the UN Climate Change High-Level Champion, emphasized that achieving the goal of limiting climate change to 1.5°C cannot be accomplished without the shipping industry contributing its share.

She noted that the sector must intensify its efforts within a short timeframe to align with a 1.5°C transition. Al Mubarak also expressed hope that the findings of the report would offer a practical and detailed roadmap for action to accelerate this transition, ensuring it is equitable and benefits workers and communities worldwide.

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’, according to the report.

“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,” Jesse Fahnestock, Director of Decarbonisation at the Global Maritime Forum.

He also pointed out that there is no time to waste and emphasized the need for a significant shift in momentum over the next 12 months to make the 2030 targets achievable.

Fahnestock explained that due to the long lead times required to implement policies, finance, and construct vessels and energy supply chains, the window of opportunity is only slightly open but still exists. In the end, he urged the maritime industry to take the report as a serious wake-up call for the sector to accelerate the necessary transformation.

A recent report published by Mario Draghi—former European Central Bank President— identifies shipping as one the most difficult sectors to decarbonize, requiring annual investments of €40 billion. The report also highlights the significant price gap between conventional and clean fuels, which for shipping can be up to five times more expensive. Shipping faces stiff competition from other transport modes for access to clean fuels, in particular advanced biofuels and e-fuels.

The ‘Fit for 55’ package and the recent historic IMO agreement on Greenhouse Gas Strategy have set clear targets for shipping to reach net zero by 2050. To meet its European and international climate targets, shipping urgently needs priority access to clean fuels, in sufficient quantities and at affordable prices, according to European Community Shipowners’ Associations (ECSA).