The Role of Shipbuilding in Maritime Decarbonisation

Executive Summary

Maritime transport is central to global trade, facilitating around 80% of the world’s exchange of goods. Despite being the most carbon-efficient mode of transport on a per tonne basis, the shipping industry is responsible for almost 3% of global greenhouse gas (GHG) emissions, and without decisive action, the share of emissions from shipping could rise significantly by 2050. The shipbuilding industry plays a crucial role in enabling this transformation, as it is responsible for designing and constructing vessels that are compatible with alternative fuels and advanced energy-efficient technologies.

Recent regulatory measures, notably the 2023 GHG strategy by the International Maritime Organisation (IMO), signal an intensified commitment to decarbonise maritime transport, with targets set for net-zero greenhouse gas emissions ‘by or around, i.e. close to,’ 2050. This global effort is complemented by national and regional policies, such as the European Union’s inclusion of maritime transport into its Emissions Trading System (ETS) and the FuelEU Maritime Regulation. Spurred by this wave of net-zero measures, the maritime sector is undergoing a significant transformation, marked by the development and uptake of low/zero-emission and digital solutions.

Despite this progress, key challenges to achieving net-zero shipping remain, including an aging global fleet and the heterogeneity of the maritime industry rendering a “one-size-fits-all” decarbonisation approach unfeasible. Key issues include the uneven pace of transition across ship segments and regions, the need to sustain innovation for ongoing advancement and cost reduction of low- and (near) zero-emission solutions, the limited infrastructure and high cost for alternative fuels, and the critical challenge of financing the transition.

Technology trends for alternative fuels and propulsion

While the construction of alternative fuel capable ships is increasing, fleet uptake remains low. The maritime sector is shifting toward low/zero-emission solutions, with ships capable of using alternative fuels making up over 52% gross tonnage in the global orderbook. Yet only around 7% of the global fleet can currently operate with these technologies, and maritime GHG emissions continue to rise.

Fuel optionality in ships is preferred to one specific fuel choice. Fuel options in the orderbook point to increased diversification, with around 37% of vessels (by gross tonnage) being LNG capable, 9.7% methanol capable and 0.55% ammonia capable. Emerging technologies to reduce alternative fuel demand, such as battery, hybrid or nuclear propulsion, are also gaining traction for certain ship types but their uptake in the fleet remains relatively low (<1%).

Design and construction capabilities are regionally concentrated. Chinese yards make up 47% of the orderbook in alternative fuel capable vessels in CGT, followed by Korea (42%). The building of methanol and ammonia capable ships is mainly concentrated in Korea, China and Japan, while ships capable of running on biofuels show a more diverse set of producer countries and manufacturers. European engine designers supply over 65% of the alternative fuel capable fleet and orderbook.

Retrofits in selected energy saving technologies and fuel conversions more than doubled since 2020 but account for less than 1% of retrofits and repairs. European and Chinese yards are leading alternative fuel conversions. Chinese yards also primarily carry out propeller and hull EST retrofits. Alternative fuel conversions focus on passenger vessels, EST retrofits on bulk carriers and containerships. Fuel conversions take significantly longer to complete than other retrofits (+45 days), hinting at potential capacity bottlenecks as demand grows.

Shipbuilding capacity for low/zero-emission vessels

In 2024, 82 builders constructed alternative fuel capable vessels. The past ten years have seen growing capacity among shipyards to construct vessels capable of using alternative fuels, with their share of total active yards increasing to between 7 and 36% for different ship types in 2023. This trend is uneven across ship types and fuel options: bulk carriers and tankers lag in adoption, while a significant portion of yards build alternative fuel capable containerships and cruise ships. LNG currently leads in construction, with methanol also seeing increased growth.

The yearly growth in patenting activity in low-carbon technologies is slowing. Despite the growing pressure to decarbonise the maritime sector, the yearly share of low-carbon patenting activity in maritime technologies peaked between 2010 and 2015. Yearly patents have also decreased in total numbers. The EU and Japan have consistently shown the most patent filings in this field, but China has surpassed other key innovating countries in patenting activity in the past five years.

Main shipbuilding companies are engaging in decarbonisation efforts, but regional differences persist. Seven out of 15 studied major shipbuilding companies do not have a 2050 net-zero emissions target, indicating that commitments vary by region. Shipbuilding companies promote low/ zero-emission vessel development through technology demonstration projects, emphasising digitalisation and ‘Just Transition’ strategies.

Global plans for alternative fuel storage and bunkering are progressing, but implementation remains limited. Methanol and ammonia infrastructure for shipping is mostly at the planning stage, with major uncertainties around fuel production, supply chains, port readiness, and safety standards.

Policy measures and financing mechanisms

Government policies focus mainly on shipping, less on shipbuilding. While over 80% of assessed jurisdictions are implementing maritime decarbonisation strategies, most of these focus on the shipping sector, and less on the shipbuilding industry. Moreover, 5 out of 25 countries do not have a dedicated decarbonisation strategy for the maritime sector, potentially causing an inconsistent policy mix and enforcement of measures.

Governments emphasise support programmes, not mandatory measures. Most countries focus their policy measures on strategies, roadmaps and a spectrum of government-backed support programmes to support decarbonisation. Most common policy target areas are research and development (R&D) and alternative fuel uptake and supply. Binding measures, such as fuel standards or carbon pricing mechanisms are limited.

Increased government guidance can support green finance practices. The use of green finance instruments is largely limited to major shipbuilders, pointing to gaps in companies’ decarbonisation efforts. While some jurisdictions have implemented green finance taxonomies, there are few measures specifically focused on access to finance and investment, highlighting the potential for increased government guidance to strengthen the business case for carbon-neutral fuels and mitigate investment risks.