Government 2025 Annual Review & Outlook
Green alert
Suez diversions , lack of IMO agreement put 2030 emissions targets at risk
By Greg Knowler
A look back : Most ocean carriers have set their targets for achieving net-zero emissions at 2040 or 2045 , but to achieve those ambitious goals , they must first hit the interim emissions targets of the International Maritime Organization ( IMO ) that require a 20 % cut — striving for 30 % — by 2030 . That ’ s going to be difficult , however , given a lack of clarity around which green fuel or fuels will be supplied at an adequate scale to power the global fleet . That uncertainty has been evident in recent container ship orders , with 80 % of the 1.7 million TEUs in vessel capacity ordered in the first 10 months of 2024 capable of sailing on methanol or liquefied natural gas ( LNG ), according to Sea-web , a sister company of the Journal of Commerce within S & P Global . And even as carriers hedged their ship order bets on fuels for which they have been able to secure supply agreements , carbon dioxide emissions rose sharply in 2024 . Starting in late 2023 , the diversion of vessels around southern Africa due to the Red Sea crisis added two weeks and over 2,000 nautical miles to voyages that normally would have transited the Suez
The big picture : The need to narrow the price gap between fossil fuels and cleaner alternatives is the single most important challenge facing the maritime industry as it strives to meet interim emissions targets on the way to reaching netzero by 2050 . Making renewable energy more competitive will drive up investment in clean technologies and scale up sustainable fuel production , but it relies on increased government support to bridge the operational cost gap of transitioning to alternative energy sources .
Canal . The combination of these longer voyages , higher sailing speeds necessary for ships to maintain their schedules and resulting port congestion in Asia and Europe caused greenhouse gas ( GHG ) emissions to return to the peak levels recorded in 2008 , according to data compiled by rate benchmarking platform Xeneta .
A look ahead : The rising emissions are a worrying development for the IMO as pressure builds from across the maritime supply chain for it to adopt and roll out midterm measures , including the establishment of a global fuel standard for marine fuels and a global pricing mechanism for GHG emissions . With 176 member states — all with different agendas — the IMO tends to move at a glacial pace when adopting global regulations , but with just five years to reach 2030 emissions-reduction targets , it no longer has that luxury . Legal text for the midterm measures must be
Approximately 80 % of container ships ordered through October are capable of sailing on methanol or LNG . Shutterstock . com
The IMO tends to move at a glacial pace , but with 2030 emissions targets looming , it no longer has that luxury .
thrashed out and approved at the next Marine Environment Protection Committee meeting in April 2025 so measures can be implemented in October if the maritime industry is to have any hope of achieving its 2030 targets .
The next inflection : A return to the shorter Suez Canal route — which is by no means assured in 2025 — would give the maritime industry a significant leg up in its efforts to meet its looming GHG targets . Carriers would immediately slow down ships , drastically reducing fuel consumption , and the release of additional capacity would allow them to send large swathes of older , less-efficient tonnage to the demolition yard . But ultimately , closing the yawning gap in pricing between traditional and alternative fuels with a polluter-pays mechanism that taxes GHG emissions and places all carriers on the same playing field , whatever future fuel pathway they decide to sail down , is the only way the industry can meet those targets .
email : greg . knowler @ spglobal . com
56 Journal of Commerce | January 6 , 2025 www . joc . com