Maritime executives attending an industry event on June 2, 2025, voiced significant concerns about the shipping sector’s struggle to meet stringent international regulations on greenhouse gas (GHG) emissions. They emphasized that this ambitious transition to alternative fuels cannot be achieved by shipping companies alone and requires robust support from key stakeholders across the value chain: cargo owners, infrastructure developers, and financiers, reports S&P Global.
Significant Concern
In April, the International Maritime Organization (IMO) made a significant step towards achieving net-zero shipping by 2050, voting for global greenhouse gas (GHG) standards on marine energy. This move has been lauded by some as the first regulatory piece to globally impose a cost on sector-wide emissions, effectively putting shipping on the decarbonization front.
However, several executives from some of the world’s largest shipping companies are vocalizing significant concerns. They argue that the high costs and low availability of low-carbon alternatives to conventional, oil-based fuels could impede the energy transition despite the regulatory push.
Harald Fotland, CEO of chemical tanker operator Odfjell, articulated this challenge at a Capital Link forum during Nor-Shipping, stating, “The challenge is that we are basically doing this alone. There is a limit for how much a shipowner can do alone without support from the total value chain.”
A key issue highlighted is the disparity in how different shipping segments can manage these incremental costs. While container lines have demonstrated an ability to pass on some of the expenses associated with the low-carbon transition to their customers, tanker and dry bulk operators are finding it significantly more difficult to find charterers willing to shoulder such “green premiums.” Fotland further emphasized this point, adding, “There is almost zero interest among our customers to pay for the [eco] solutions.”
The stark price difference between conventional and low-carbon fuels underscores this financial hurdle. According to the Platts global bunker cost calculator, April’s average bunker price for very low sulfur fuel oil (VLSFO) in Singapore, the world’s largest bunker port, was $493.62/metric ton. In contrast, the price for 100% sustainable methanol was $1,886.55/metric ton VLSFOe (VLSFO equivalent), demonstrating a substantial cost disparity that operators are struggling to absorb or pass on.
New Standards
The IMO’s new fuel standards, slated for adoption in October and potential enforcement from 2028, are designed to implement global GHG intensity thresholds with varying penalties and introduce a carbon trading mechanism. While this global approach is favored over regional regulations for creating a level playing field, its complexity is a significant concern for some industry participants.
Carl Hagman, head of European operations for Japanese shipping conglomerate NYK, articulated this frustration, stating, “It’s so complicated, and there was nobody in the room from the shipping industry that put these regulations in place. I certainly don’t understand how we’re going to be able to implement it.” This sentiment highlights a potential disconnect between policymakers and industry operators, raising questions about practical implementation.
The IMO also plans to introduce a reward scheme to subsidize shipping companies using low-carbon fuels. However, the detailed rules for this scheme are not expected to be finalized by UN agency member states until March 2027, adding further uncertainty for companies planning their decarbonization investments.
Semiramis Paliou, CEO of Diana Shipping, emphasized that the “Green transition is not only a technical challenge, it’s also a financial challenge.” She noted the significant difficulty in securing financial support for these necessary investments.
Despite initiatives like the Poseidon Principles, signed by some of the top 35 ship financiers globally with an aim to achieve net-zero GHG from their portfolios by 2050, a UCL Energy Institute study last year found that these financiers have not provided more favorable financing terms for low-carbon ships. This contradicts the vocal support for decarbonization from commercial stakeholders, as Paliou pointed out: “Commercial stakeholders tend to be very vocal about the fact that they want to decarbonize and they want to be part of this green transition. In reality, they are not there to support any of these investments.”
Saif al-Mheiri, CEO of Abu Dhabi Maritime, expressed a stark warning: the industry is currently on track to miss the 2050 net-zero target, as the pace of decarbonization has yet to accelerate sufficiently to meet the ambitious goals. This collective assessment underscores the multifaceted challenges – regulatory complexity, high costs, lack of financial incentives, and insufficient uptake of alternative fuels – that the shipping industry faces in its journey towards decarbonization.
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Source: S&P Global
