The 175 member states of the UN’s International Maritime Organization have adopted more ambitious targets to reduce the greenhouse gas emissions from ships.

They have agreed to reach net zero “by or around” 2050 and also agreed to “indicative checkpoints” to monitor the reduction of emissions by 2030 and 2040. Emissions from shipping account for 3% of global emissions.

The So What

“Although this is progress given where the industry was just a few years back, the imprecise wording and lack of detail on the measures increases uncertainty,” according to Peter Jameson, Managing Director and Partner at BCG and global topic lead for Maritime Sustainability.

“The committee also falls short of creating clarity on the much-needed financial incentives, such as market-based measures like a carbon levy. The absence of these measures undermines the industry’s ability to transition to sustainable practices.”

Laurids Schack, Project Leader in BCG and shipping decarbonization specialist, adds: “The vagueness maintains ambiguity and will undoubtedly cause delays in action. Progress towards decarbonization will not accelerate as needed, as industry players wait for the next major agreement in Spring 2024.”

Nevertheless, a recent survey of 128 shipowners and operators by BCG and the Global Centre for Maritime Decarbonisation found the industry has high ambitions and many players are looking to increase green investments and develop sustainability roadmaps.

“That means it is even more essential for industry players to press ahead with their own roadmap for sustainability despite the uncertainty,” Jameson says.

Now What

According to Jameson:

• There will be a tapestry of countries and regions implementing their own regulation, making it harder for shipowners to navigate and comply.
• The shipowners who are frontrunners will have a competitive advantage by moving ahead of the pack. There are some no-regret moves for players to accelerate when it comes to technological and operational efficiencies. The first step is to increase familiarity with these levers and build internal capabilities. Additional levers include the adoption of drop-in sustainable fuels and efficiency technology onboard vessels.
• “It’s even more critical now for shipowners to lay out a roadmap that sits at the heart of a company’s strategy. The boundaries in which they can operate remain wide. They need to establish the long and short-term economic benefits of decarbonization and how they target customers that are willing to pay,” Jameson says.