The role for investors in decarbonizing global shipping

Published — May 17, 2022

Investor Insights for a low carbon world

ESG By EDF is a suite of investor-oriented research products providing insights on transition issues in carbon-intensive sectors informed by EDF expertise in science, policy and industry.

• Maritime shipping is a hard-to-abate sector with significant carbon emissions. Decarbonizing shipping, which is responsible for around 3% of global emissions, requires transitioning the industry from using oil-derived bunker fuel to a range of solutions, at the Center of which are new zero-carbon fuels.

• The industry is not on track for alignment with the Paris Agreement. Fully decarbonizing shipping by 2050 is possible but will require that stakeholders take more ambitious steps to reduce fuel usage right away and accelerate the uptake of non-fossil fuels.

• Shipping providers are just starting to focus on carbon. Only 12 of the largest 94 ship owners have committed to a net zero target, a key first step toward transition planning. In the near term, ship owners and operators should adopt solutions that reduce fuel usage. Integrating zero carbon fuels and technologies at increasing scales will accelerate the longer-term transition.

• Shipping customers drive demand for low-carbon shipping. Cargo owners and charterers should signal a willingness to pay for low-carbon supply chain services by prioritizing the use of low emissions vessels.

• Commitments and disclosures for shipping companies. In this summary report we identify key “asks” for investors and lenders to make of shipping providers and shipping service users and recommend company-level disclosures.

• Full report to be published in Summer 2022. The upcoming full report includes background on key factors in the sector’s energy transition, including carbon reductions that can be achieved today, the cost and performance drivers of leading zero-carbon fuels, and a review of progress by 94 shipping companies toward a low-carbon transition.