Climate impact of shipping (2024)

Currently there is confusion as to whether all shipping and aviation emissions are within the scope of the Paris Agreement, as these emissions are released beyond national borders. Some argue that the Paris Agreement articulates “economy-wide absolute emission reduction”, which clearly encompasses these sectors as vital parts of national economies. Others, including the International Chamber of Shipping, believe that these sectors are not subject to Paris because they are not specifically mentioned.

A legal briefing by T&E, shows that contrary to industry claims, shipping and aviation are included in the Paris Agreement. Unlike the Kyoto Protocol, the central pillar of the Paris Agreement is a temperature goal. Parties are obligated to implement “economy-wide absolute emission reduction targets”, that is, to control anthropogenic emissions so that global warming is limited to well below 2°C. A failure to address all anthropogenic emissions – including international shipping and aviation – would violate the central aim of the Agreement. T&E calls on states to revise their NDCs to take into account all their shipping and aviation emissions.

In July 2023, the IMO agreed to a new climate strategy that includes reaching net-zero greenhouse gas emissions “by or around, i.e., close to, 2050.” In the meantime the IMO has set the target of cutting emissions by 20%-30% by 2030 and 70%-80% by 2040, against 2008 levels.

Despite these plans and many successive rounds of negotiations, the IMO has so far failed to adopt reduction measures to set the maritime sector on a pathway compatible with the temperature goals of the Paris Agreement.

Since 2013, however, the design efficiency of ships has improved considerably. Industry claims it is due to the EEDI but this cannot explain some of the extraordinary levels of over-compliance being seen by certain types of new ships with the 2025 Phase III EEDI requirements, which are complying almost a decade in advance and sometimes by a factor of 2. Cyclical higher fuel prices and low freight rates are more likely to be the main drivers of efficiency. Although the current over-compliance is welcome news, without strengthening the EEDI new ships will likely be less efficient when market conditions (long-term fuel prices and freight rates) change.

IMO discussion has acknowledged that the EEDI is not stimulating the uptake of new technologies, nor is it driving efficiency improvements. Read the study here. Since 2013 newly-built ships subject to the EEDI have performed much the same as those not covered by the regulation.

Almost three-quarters (71%) of all new containerships, which emit around a quarter of global ship CO2 emissions, already comply with the post-2025 requirements of the IMO’s Energy Efficiency Design Index (EEDI), according to a recent study based on the in-house analysis of the IMO’s own data. Additionally, the best 10% of new containerships are already almost twice as efficient as the requirement for 10 years’ time. This reveals that the EEDI is not incentivising the uptake of new technologies – all it may do is prevent a reversion to the worst designs of the past. These recent efficiency gains are part of a recognised historical trend for ship design efficiency to fluctuate according to economic cycles and fuel prices.

While reducing design speed is a very effective way of improving the design efficiency of a ship, there has in fact only been a modest reduction in the average design speed of new vessels according to the data analysed (and that has largely been limited to container ships). Meanwhile the design efficiency of new vessels has improved considerably. With efficiency improvements via new technologies and speed reduction largely untapped, there remains considerable potential for further design efficiency improvements but these will not be taken up unless the IMO incentivises them through stricter EEDI requirements.

Slow steaming refers to the practice whereby the (operational) speed of the ship is reduced. It basically means that the ship’s engine is not used at full power, thus saving fuel, reducing CO2 and air pollutant emissions.

Reducing ship speed by 10% will lead to a 27% reduction of the ship’s emissions. Overall, if all ships were to slow-steam, the available capacity on the market would be reduced (more ships would be needed to carry out the same transport work). If the additional emissions of building and operating these new ships were considered in the equation, then reducing the fleet’s speed by 10% would lead to overall CO2 savings of 19%.

Click here to see how a 20% reduction in ship speed would have a big impact on the climate and environmental footprint of shipping.

Liquid natural gas (LNG) is considered a potential alternative to conventional heavy fuel oil (HFO) and marine gas oil (MGO) partly due to its perceived environmental benefits as LNG can lead to a net decrease in SOx of up to 100% and of NOx emissions up to 90% compared to HFO. Also, some industry leaders and policymakers also consider LNG an option in delivering a pathway to decarbonisation for the shipping sector, leading to LNG being classified as an ‘alternative fuel’.

However research shows that, at best, LNG delivers at best up to 10% reduction of GHG compared to the replaced diesel fuel and all this under an optimistic methane leakage scenario. This level of potential GHG savings will likely be cancelled out in absolute terms because of the growth of the maritime trade. If methane leakage rates are higher, as some studies suggest, switching to LNG could result in increased GHG emissions compared to the diesel fuel it replaces. Analysis of laboratory engine tests show that modern dual-fuel LNG engines installed in new ships will have a GHG performance worse than MGO. Read our recent blog on LNG.