- Uncertainty Hinders Shipping’s Energy Transition
- Global Politics Influence Decarbonization Decisions
- Regulatory Certainty Improves, but Challenges Persist
A qualitative survey by design and engineering consultancy Houlder has raised concerns that uncertainty is a big hurdle in shipping. Shipowners across the container, tanker, bulk, cruise, and ferry sectors comprehend the urgency of decarbonizing in energy due to increasing regulation pressures on the environment. At the same time, many portrayed a dilemma of uncertainty, wherein decarbonization pathway decisions are ambiguous, but doing nothing is not an option, reports Houlder.
The Effect of Global Political Development
Shipowners sounded out the influence of political landscapes, drawing much attention in respect of the election cycle that occurred in 2024 across 64 countries. They said that many were waiting with bated breath to see how the U.S. presidential election might impact their sustainability strategies. Others cited delays related to unclear transport department guidance regarding the definitions of domestic shipping or inclusions and exclusions and phased approaches for implementation.
One passenger shipowner remarked: “What’s the definition of domestic shipping going to be? What are the exclusions, inclusions? Are they going to do a phased-in approach like the EU has? They’ve just got no answers to any of it at the moment.”
Progress in Regulatory Certainty
Despite some governmental ambiguities, there is much more confidence in regulatory frameworks than existed at the time of Houlder’s study two years ago. The ETS is increasingly impactful for smaller shipowners but manageable for the larger as part of the general business plan; it has introduced a relatively consistent carbon price that helps build business cases.
FuelEU Maritime: Driving Force
FuelEU Maritime has also proved to be the new central point for shipowners. It is considered more in the books than any other regulation because it contains heavy penalties. If non-compliance occurs, fines of €2,400 per tonne of energy equivalent of Very Low Sulphur Fuel Oil (VLSFO) are imposed, much steeper than the EU ETS fines.
One respondent highlighted its influence: “ETS is not a particularly big deal. It’s small penalties compared to FuelEU. What it [FuelEU] has done is shocked businesses into realising the penalties they are going to have to pay if they don’t act on energy efficiency…and then eventually future fuels.”
Navigating Decarbonization Amid Uncertainty
Rupert Hare, CEO of Houlder, emphasized the urgency of addressing uncertainty:
“We can’t let uncertainty become an alibi for inaction on decarbonisation. Owners need to accurately simulate scenarios on vessels with information available today to make informed decisions now. Surrounded by fog, you’d slow to a crawl without aids to navigation.”
Jonathan Strachan, Houlder’s Chief Technical Officer, echoed this sentiment, advocating for proactive approaches:
“100% certainty is neither possible nor necessary. Leading shipowners are starting the journey now, staying agile to adapt as needed, and keeping well-informed about available technological pathways.”
Barriers to Scaling Green Fuels
Two years after its previous study, Houlder revisited key topics with shipowner executives, including verified performance data for clean technologies, changes in the environmental regulatory landscape, and challenges to scaling green alternative fuels. Uncertainty was identified as a recurring theme across all discussions, underscoring its pervasive impact on shipping’s decarbonization journey.
Houlder’s research re-emphasizes the importance of agility, collaboration, and informed decision-making to navigate the constantly changing sustainable shipping landscape.
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Source: Houlder
