Net Zero Industry Tracker 2024 Shipping

In the last five years (2019-2023), shipping saw an increase in global demand, while the CO2e emission intensity (CO2e emissions per cargo ton mile) saw a reduction of 4.6%. This decrease can be attributed to several key factors: 1. Increase in average ship size: The increase in average ship size across various ship types played a crucial role in reducing emission intensity. 2. Slow steaming: The intentional reduction in vessel speeds, known as “slow steaming” for bulk carriers, chemical tankers, container ships and oil tankers significantly contributed to lowering emission intensity. 3. Improvements in design efficiency: Significant advancements in the overall design efficiency of oil tankers, bulk carriers and chemical tankers led to improvement in the energy efficiency of ships, and hence further contributed to the reduction in emission intensity. However, these improvements in efficiency, speed and size optimization alone will not be sufficient to achieve net-zero targets. In addition, ship owners are confronted with the challenge of an ageing fleet, with the global fleet averaging 22.2 years of age in 2023.174 This presents two key issues: firstly, there is a need to introduce new vessels that run on ZEFs to replace older ships, and secondly, the existing ships need to be retrofitted with dual-fuel engines to enable operation on ZEFs. The fuel mix remains heavily dependent on fossil fuels, accounting for approximately 99% of total energy consumption. In 2022, heavy fuel oil (HFO) comprised 56% of the fuel mix, an increase from 49% in 2021, driven by a decline in the use of light fuel oil (LFO) and liquified natural gas (LNG). LNG represents approximately 6% of the fuel mix, while methanol usage remains minimal, representing less than 1% of the overall fuel mix. A substantial change in the fuel mix trajectory is required to effectively eliminate Scope 1 emissions. Therefore, it is imperative to promote the production and use of clean hydrogen-based ZEFs. Yara Clean Ammonia, North Sea Container Line and Yara International formed a strategic partnership to develop the world’s first container ship powered by clean ammonia as a fuel source in 2023.175 Maersk launched its first methanol-powered container ship in 2024.176 In collaboration with MAN Energy Solutions, MITSUI E&S successfully tested the world’s first hydrogen-powered marine engine in 2024.177 Performance The sector currently accounts for 2% of global CO2e emissions. Fuel combustion during maritime operations has a major contribution to emissions in the shipping sector. Thus, the fuel mix used is a critical driver for emission intensity. Shipping industry performance TABLE 6 Performance metric Change (2019-2023) Industry output +3.6%171 CO2e emission intensity -4.6%172 Total CO2e emissions -1.2%173 Net-Zero Industry Tracker: 2024 Edition 4