Decarbonising Global Trade: The Real-World Constraints of Net Zero Shipping

Global shipping is the backbone of international trade, carrying more than 80 percent of global merchandise trade by volume according to the International Maritime Organization (IMO). It is also responsible for approximately 3 percent of global carbon dioxide emissions, a share that is expected to increase if no structural decarbonisation occurs.

Despite increasing regulatory pressure and technological progress, the pathway to net zero shipping remains constrained by a combination of fuel availability, infrastructure limitations, cost structures, and regulatory fragmentation.

The Scale of the Challenge

The IMO’s revised greenhouse gas strategy sets a target of reaching net zero emissions “by or around 2050.” Achieving this goal requires a fundamental shift in how ships are powered, operated, and fueled. However, current fleet composition and fuel dependency patterns present significant inertia.

• More than 99 percent of the global fleet still relies on conventional marine fuels such as heavy fuel oil and marine diesel
• The entire fuel ecosystem must be replaced or retrofitted within a relatively short timeframe
• Global trade flows must remain uninterrupted during the transition

These factors create a significant structural challenge for the shipping industry as it works toward decarbonisation.

Fuel Availability and Infrastructure Gaps

One of the most significant constraints to decarbonising global shipping is the limited availability of scalable alternative fuels.

While multiple fuel pathways are under development, including ammonia, methanol, hydrogen, liquefied natural gas (LNG), and biofuels, none are currently available at global scale in a fully mature supply chain.

• Alternative fuel pathways include ammonia, methanol, hydrogen, LNG, and biofuels
• None are currently available at global scale in a fully mature supply chain
• Low-emission hydrogen production remains below 1 percent of global hydrogen output as of the mid-2020s
• Sustainable biofuel supply remains constrained by feedstock availability and competing demand from aviation and road transport

Infrastructure limitations compound this challenge. Global port infrastructure is unevenly prepared for alternative fuel bunkering, storage, and distribution. While leading hubs in Europe and parts of Asia are investing in early-stage infrastructure, many regions remain in planning or pilot phases.

Cost Barriers and Economic Viability

Cost remains a critical barrier to scaling low-carbon shipping fuels. Green ammonia and green hydrogen, for example, are currently significantly more expensive than conventional marine fuels on an energy-equivalent basis.

Even transitional fuels such as LNG, while more widely available, present lifecycle emissions challenges and uncertain long-term regulatory positioning.

• Green ammonia and green hydrogen remain significantly more expensive than conventional marine fuels
• LNG presents lifecycle emissions challenges and uncertain long-term regulatory positioning
• Fleet renewal cycles typically span 20 to 30 years
• Uncertainty in future fuel pricing and regulatory frameworks is slowing large-scale capital deployment into alternative fuel vessels

This creates a complex investment dilemma for shipowners and operators, who must make long-term decisions in an evolving regulatory and fuel landscape.

Regulatory Fragmentation

Global shipping operates under a fragmented regulatory environment. While the IMO provides an overarching global framework, implementation is largely dependent on regional and national policies.

The European Union has taken a leading role through mechanisms such as the EU Emissions Trading System expansion to maritime transport and FuelEU Maritime regulations, which set lifecycle fuel intensity standards.

• Implementation of shipping decarbonisation policies varies across regions and jurisdictions
• Different approaches are emerging in carbon pricing, compliance requirements, and enforcement mechanisms
• Ships operating across multiple jurisdictions face overlapping regulatory obligations
• Administrative complexity and compliance costs continue to increase

This fragmentation creates inefficiencies in global fleet planning and adds complexity to long-term investment decisions.

Green Corridors and Pilot Projects

Despite these constraints, progress is visible through targeted initiatives such as green shipping corridors. These are structured trade routes where ports, operators, and governments coordinate to enable low or zero-emission shipping operations.

• Green corridors focus on coordinated low or zero-emission shipping routes
• Examples include early-stage initiatives between Europe and Asia and select transatlantic routes
• These projects integrate fuel supply planning, port infrastructure readiness, and regulatory alignment
• Most projects remain in pilot or early commercial stages

Their scalability remains dependent on fuel availability and coordinated policy support across multiple jurisdictions.

The Role of Digitalisation and Efficiency

Operational efficiency improvements are also contributing to emissions reduction. According to industry studies, slow steaming, hull optimisation, and digital route planning can deliver meaningful reductions in fuel consumption.

• Slow steaming can help reduce fuel consumption and emissions
• Hull optimisation improves vessel efficiency
• Digital route planning supports more efficient operations
• Measurement, reporting, and verification systems are increasingly supporting regulatory compliance and carbon accounting

However, efficiency improvements alone are insufficient to achieve net zero targets. They serve as complementary measures rather than structural solutions.

A System Under Transition

Decarbonising global shipping is not a linear technological transition. It is a complex system transformation involving fuel production, infrastructure development, regulatory coordination, and capital reallocation.

• The transition requires coordinated development across multiple sectors
• Progress is being made across fuel production, infrastructure, and policy frameworks
• Structural limitations continue to constrain the pace of change
• Alignment between investment, infrastructure, and regulation remains critical

Without this alignment, the gap between climate ambition and operational reality is likely to persist.