The Role of Shipbuilding in Maritime Decarbonisation

1. Overview of shipbuilding and maritime decarbonisation

Abstract

Shipbuilding plays a critical role in maritime decarbonisation, shaping the industry’s ability to reduce greenhouse gas (GHG) emissions and adopt new low/zero-emission technologies and digital solutions. The transition to net-zero shipping is progressing, but key challenges persist, including financing and generating demand for alternative fuels, scaling up infrastructure, and addressing regulatory fragmentation. This chapter gives an overview of the analysis on technology developments and policy measures in the report and provides concluding recommendations on ensuring a holistic and effective net-zero transition. It highlights the need to coordinate efforts between first movers and (fast) followers, to sustain innovation for technology development, and to secure financing while establishing clear demand signals for alternative fuels and low/zero-emission vessels.

1.1. Decarbonising maritime transport— what’s the issue?

Maritime transport is central to global trade, facilitating around 80% of the world’s trade of goods (UNCTAD, 2024[1]). 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, necessitating a response to mitigate its impact on climate change (International Maritime Organization, 2020[2]). Further, the rebound in CO₂ emissions following a dip in 2020 due to the COVID-19 pandemic underscores the urgent need to decouple seaborne trade growth from emissions. Unlike many other sectors of the economy, CO₂ emissions from the world’s maritime fleet increased by 3.7% from 2020 to 2024 (Clarksons Research, 2024[3]), highlighting the sector’s ongoing reliance on fossil fuels and the scale of the decarbonisation challenge.

With the increasing global emphasis on attaining carbon neutrality, the maritime sector is facing growing demands to diminish its environmental impact. These pressures come not only from regulators but also from stakeholders throughout the supply chain, including cargo owners, financiers, and port authorities, who are seeking tangible commitments to emissions reduction (COZEV, 2023[4]). However, achieving net-zero emissions will require overcoming significant challenges, including secondary emissions, safety risks, crew welfare considerations, and economic feasibility. Coordinated industry-wide collaboration is essential to ensuring that decarbonisation efforts are effective, economically viable and resilient (Deng and Mi, 2023[5]).

An ageing fleet and slow turnover highlight the urgency of future-proofed shipbuilding. The increasing age of the global fleet, averaging around 13 years in 2024 (on a tonnage weighted basis), underscores the magnitude of the tasks (UNCTAD, 2024[1]). As vessels age, the risk of reduced energy efficiency increases. Further, ships have a slow turnover rate, with a typical lifespan of around 25 years, meaning that newbuild vessels and vessels in the orderbook today are likely to remain in service until 2050. This underscores the importance for newbuilds to be designed in alignment with future regulatory and technological requirements or constructed to allow for retrofitting. By the end of 2024, around 7% of the global fleet and 52% of the orderbook (in gross tonnage) are alternative fuel capable (Clarksons Research, 2024[3]).This means that just over half of newbuilds can operate on alternative fuels or propulsion systems— many of which include fuels, which may not be fully aligned with net-zero objectives (Fricaudet et al., 2022[6]).

Understanding the heterogeneities of the maritime sector is key. Given the heterogeneity of the maritime industry, characterised by diverse ship sizes and operating routes, implementing a uniform “one-size-fits-all” solution or technology for decarbonisation is not feasible. Instead, a portfolio approach is required, incorporating energy efficiency improvements, operational changes, and the adoption of new fuels. Further, each phase of a ship’s lifecycle— design, material sourcing, construction, operation, and end-of-life recycling— has emissions implications (Chatzinikolaou and Ventikos, 2015[7]). This presents both challenges and business opportunities, particularly in the shipbuilding sector, which is seeing increased demand for dual-fuel and fuel-flexible vessels.

Financing and infrastructure challenges to scaling up alternative fuels remain. Amidst the accelerating shift in fuel technology within the maritime sector, the pursuit of scalable solutions is a prevailing concern. Energy efficiency and cost minimisation stand as key objectives in this transformative landscape. While pioneering initiatives within the industry have underscored the commercial viability of such transitions, key challenges for financing and scaling up alternative fuel production and supply remain. Research estimates suggest that decarbonising shipping with ammonia by 2050 would require USD 1.2–1.6 trillion, or USD 60–80 billion per year from 2030 to 2050. 87% of the investment would go toward fuel production, storage, and distribution, while 13% would be spent on ship upgrades, including engines, storage, and energy efficiency (Global Maritime Forum, 2020[8]). These challenges are primarily rooted in market uncertainties, encompassing the anticipation of future technological advancements, the cost-effectiveness of alternative fuels, safety considerations and the readiness of fuel supply and bunkering infrastructure at ports (DNV, 2023[9]).

Pioneering projects demonstrate that the transition is commercially viable. Early adopters are already investing in alternative solutions, such as methanol capable ships, battery-electric short-sea vessels, and wind-assisted propulsion technologies. With the right policies and financial mechanisms, emerging technologies and fuels can be scaled. Strategic investment in port infrastructure and global bunkering networks for alternative fuels is critical to ensuring that new vessels can access the necessary refuelling options (DNV, 2024[10]). Moreover, innovative financing tools— such as green bonds and carbon contracts for difference— are being developed to bridge the cost gap and de-risk investment in green shipping.

Regulatory momentum is increasing to drive new technologies and practices. Regulatory developments, such as the strengthened International Maritime Organization (IMO) Strategy on Reduction of GHG Emissions from Ships in July 2023 (the 2023 IMO GHG Strategy), reflect a commitment to decarbonise the sector, with targets for achieving net-zero greenhouse gas emissions “by and around, i.e. close to, 2050” (International Maritime Organization, 2023[11]). Ongoing negotiations at the IMO are also focused on developing and implementing a “basket of measures” in support of the 2023 GHG Strategy (International Maritime Organization, n.d.[13]). If designed and implemented effectively, such measures could support market certainty to help unlock large-scale investment in low/zero-emission shipping. Further, the European Union (EU) incorporated maritime transport in its Emissions Trading System (ETS) in 2024 and introduce the FuelEU Maritime Regulation in 2025, requiring for a 2% annual increase in ships’ energy efficiency (European Commission, 2023[12]).

Beyond compliance, policy measures can create strong incentives for first movers and offer new revenue streams through innovative finance mechanisms. Shipbuilders that develop and foster expertise in constructing low/zero-emission, energy efficient vessels, along with shipowners that invest early in transitioning their fleet to low-carbon vessels through newbuilds and retrofitting and ports that position themselves as hubs for alternative fuel bunkering, can gain a competitive edge in the evolving maritime landscape. As such, the transition to net-zero shipping represents not only a regulatory challenge but an opportunity to reshape the industry for long-term development and resilience.

1.2. The transition to net-zero shipping is underway…

This report provides an assessment of the role of shipbuilding for maritime decarbonisation, evaluating both industry capacity to deliver and retrofit low/zero-emission ships and governments’ maritime decarbonisation policy measures relevant to shipbuilding. The analysis across chapters reveals several key developments in the shipping sector, particularly in the adoption of alternative fuels and the initiatives taken by both industry and governments to facilitate this transition.

52% of the orderbook can use alternative fuels and propulsion, but only 7% in the fleet. Shipowners are placing significant emphasis on integrating alternative fuels into both fleets and fuel supply chains. The post-2020 period has seen a notable rise in the production of alternative fuel capable ships, with fuel optionality increasingly overtaking the selection of a single fuel type. By October 2024, ships capable of using alternative fuels accounted for 52% of the orderbook in GT. This diversification of fuel types includes LNG, which makes up 37% of the alternative-fuel capable orderbook, as well as emerging fuel options, such as methanol at 9.7% and ammonia at 0.55%. Additionally, technologies aimed at reducing overall fuel demand, such as battery, hybrid and nuclear propulsion, are gaining traction for certain ship types but currently represent less than 1% of the existing fleet.

Alternative fuel retrofits have doubled since 2020 but remain limited. The retrofit market for alternative fuels and ESTs has expanded considerably since 2020, with conversions of alternative fuels more than doubling. However, these retrofits still represent less than 1% of the total retrofit and repair market. European and Chinese shipyards are leading in alternative fuel conversions, with Chinese yards also showing high capacity for propeller and hull EST retrofits. Passenger vessels account for 45% of all alternative fuel conversions, while EST retrofits are most common among bulk carriers (32%) and containerships (29%). It is worth noting that fuel conversions take significantly longer to complete than other types of retrofits, averaging an additional 45 days, indicating potential capacity constraints as demand for conversions continues to grow.

In 2024, 82 shipyards globally are constructing alternative fuel capable vessels, reflecting the industry’s increasing capacity to meet decarbonisation goals. Over the past decade, the number of shipyards capable of building such vessels has grown substantially, representing between 7% and 36% of all active yards across different ship types by 2024. However, this trend is uneven across ship types: alternative fuel newbuilding in bulk carriers and tankers are slower to adopt alternative fuels, while shipyards constructing containerships and cruise ships are at the forefront of this transition. LNG currently dominates new vessel construction, but methanol is quickly emerging as a key alternative fuel for the future.

Government policies are closely aligned with the industry’s push toward alternative fuels, focusing heavily on the uptake of new alternative fuel technologies and low- and (near) zero-emission fuel supply, supporting carbon-neutral energy production and development of onshore infrastructure, particularly for fuel storage and bunkering. A key policy target area has been the creation of supportive infrastructure to enable widespread use of alternative fuels, highlighting the interdependence between technological advancements onboard ships and the necessary logistical systems on land.

1.3. … but key challenges remain to meeting net-zero targets

While the transition to net-zero shipping is advancing, the report underscores several persistent challenges, from a shipbuilding and marine technology perspective, that must be addressed to achieve comprehensive and effective decarbonisation across the sector.

First movers and quick followers (?)

One key observation from the report’s analysis is the significant variation in the speed of transition across different regions, stakeholders, and vessel types. This disparity raises questions about how to balance the role of first movers in advancing low/zero-emission solutions while ensuring that others— quick followers—can catch up without hindering the overall progress toward global net-zero goals.

The adoption of low/zero-emission technologies is advancing at uneven pace, with vessel segments, such as LNG and LPG carriers, containerships, and cruise ships, seeing higher uptake rates of energy-efficient technologies and alternative fuels. As of October 2024, around 7% of the global fleet by tonnage can use alternative fuels or propulsion systems. However, this share drops to approximately 1.8% when considering the number of vessels, suggesting that larger ships are being prioritised for alternative fuel capabilities.

There is considerable regional variation in capacities for the design, construction, and supply of alternative fuel capable vessels. Chinese and Korean shipbuilding dominates the orderbook for alternative fuels and propulsion, accounting for 47% and 42%, respectively, of vessels measured in CGT1. The construction of ships capable of running on emerging alternative fuels, such as methanol and ammonia, is concentrated in these regions, with Japan also playing a significant role. In terms of engine design for alternative fuel or propulsion, Europe is the market leader, accounting for around 65% of vessels in the global fleet and orderbook.

Differences remain in major shipbuilding companies’ decarbonisation targets. Of the 15 major shipbuilding companies studied, seven do not have a 2050 net-zero emissions target, reflecting varying levels of regional ambition and policy alignment. While many shipbuilders are promoting low- and (near) zero-emission vessel development through technology demonstration projects and 'Just Transition' strategies, the lack of uniform commitment can pose a challenge to global decarbonisation efforts.

There are significant regional disparities in alternative fuel supply chains. Global efforts are underway to develop storage and bunkering infrastructure for fuels like methanol and ammonia, but progress remains slow. Methanol bunkering capacity is currently most developed in East Asia, while ammonia storage and bunkering projects are largely concentrated in Europe and the Middle East and North Africa, though they are still in the planning stage. The development of Green Shipping Corridors also shows that first mover ports are taking the initiative to build up routes for low/zero-emission fuels, but gaps in fuel availability could slow the transition for lagging regions.

Addressing the slow-down in the growth of innovation activity

The yearly growth in patenting activity in low/zero-emission maritime technologies has slowed, despite strong commitments to research and development (R&D) by both industry and government. This disconnect between increased R&D focus expressed in companies’ strategies and governments’ policy measures and the slower pace of growth in innovation poses an obstacle to achieving sector-wide decarbonisation goals.

R&D is prioritised across policy measures and company strategies. Across the jurisdictions studied, R&D is highlighted as a cornerstone of maritime decarbonisation strategies. Significant resources are being allocated to advance technologies that address emissions reductions, with shipbuilders increasingly integrating decarbonisation into their business models.

The pace of patenting activity has decelerated in recent years. The share of low-carbon innovations within maritime technologies reached its peak between 2010 and 2015, and since then, the rate of patent filings has declined, including in OECD economies. The main exception to this trend is China, which has significantly increased its patent activity in the past five years, now surpassing other key innovating countries. Nevertheless, this increased activity in one region has not been sufficient to offset the global slowdown, underscoring a broader issue in translating R&D efforts into tangible innovations.

Cost remains a key barrier to the adoption of low/zero-emission solutions in shipping. Alternative fuel capable vessels typically carry a price premium— around 10–15% for ships designed for LNG or methanol— due to more complex engine systems and fuel storage requirements. There has been no clear downward trend in these premia, indicating limited cost reductions over time. However, the greater financial challenge lies in the high prices of alternative fuels, which remain significantly above those of conventional marine fuels. Without long-term price certainty, shipowners face elevated operational risks that may discourage investment, particularly in regions lacking regulatory or financial incentives.

Emerging technologies face technical and operation challenges. Emerging technologies, such as carbon capture, advanced nuclear propulsion, battery hybrid solutions, and wind-assisted propulsion, present important alternative solutions to decarbonisation. However, the development and deployment of these technologies face substantial challenges, including technical complexity and high upfront costs. Furthermore, the exploration of alternative fuels like ammonia and hydrogen presents additional safety and handling challenges, particularly in ensuring these fuels can be integrated safely into existing maritime operations.

Financing the transition and supporting clear demand signals

Financing the transition to low/zero-emission vessels, alongside securing a stable alternative fuel supply, remains a critical barrier to maritime decarbonisation. The report emphasises the need for targeted financial mechanisms and strong demand signals to drive investments in the necessary technologies and infrastructure.

The use of green financing instruments for low/zero-emission ships remains limited. While green finance instruments such as green bonds and loans are emerging, their uptake remains limited and is predominantly seen in globally leading shipbuilders. Smaller and less technologically advanced companies face substantial barriers to accessing capital, particularly for high-cost retrofitting projects and investments in alternative fuel capable vessels. Targeted government interventions— such as the inclusion of shipping-specific provision in green finance taxonomies, expanded access to export credit facilities, and risk-mitigation mechanisms— could help incentivise the use of green finance instruments and enable broader industry participation in the transition.

Inter-industry collaboration is key for alternative fuel supply. The development of robust supply chains relies on coordinated international efforts across sectors, including energy, shipping, and port infrastructure. Initiatives such as Green Shipping Corridors are promising but require significant scaling to deliver sector wide impact. Governments can play an important role by supporting partnerships between shipowners, fuel producers, and ports to secure fuel production and infrastructure deployment. Further, offtake agreements between shipping companies and energy providers are a useful tool for generating clear demand signals and mobilising investment, thereby reinforcing the resilience and scalability of supply chains. Expanding the concept of shipping corridors to include emerging technologies—such as carbon capture and storage (CCS)—could also accelerate adoption at sea and contribute to the development of integrated CCS value chains.

Addressing financial barriers requires a collaborative approach between governments, industry, and financial institutions. Cooperation across sectors—shipping, shipbuilding, energy, and finance—is crucial for developing financing tools that match decarbonisation needs. Existing instruments, like the Ship Sector Understanding of the Arrangement on Officially Supported Export Credits, should be adapted to support low/zero-emission technologies. The OECD can play an important role in convening stakeholders and aligning financing mechanisms with decarbonisation targets, ensuring investments flow where needed to meet net-zero goals.

1.4. Structure of the report

This report assesses the role of shipbuilding in maritime decarbonisation through several analytical perspectives:

• Chapters 2 and 3 focus on shipbuilding capacity to deliver and retrofit low/zero-emission ships and low-carbon (digital) technologies. These chapters explore key technological developments and innovation activities in areas such as digital technologies, energy-saving measures, and alternative fuels, and their impact on low/zero-carbon shipping.

• Chapter 4 evaluates the alignment of major shipbuilding companies’ decarbonisation and digitalisation objectives and strategies with international and national net-zero targets.

• Chapter 5 provides complementary analysis on onshore technological developments, specifically examining the storage and bunkering of alternative fuels within port infrastructure.

• Chapter 6 presents a comparative analysis of maritime decarbonisation policy measures relevant to shipbuilding. This chapter includes a policy mapping exercise and assessments policy measures in both OECD Shipbuilding Committee members and non-member jurisdictions.

References

[7] Chatzinikolaou, S. and N. Ventikos (2015), “Holistic framework for studying ship air emissions in a life cycle perspective”, Ocean Engineering, Vol. 110, Part B, pp. 113-122, https://doi.org/10.1016/j.oceaneng.2015.05.042.

[3] Clarksons Research (2024), World Fleet Register, https://www.clarksons.net/wfr/#!/login/?returnPath=fleet.

[4] COZEV (2023), Join Zero Emission Maritime Buyers Alliance (ZEMBA), https://www.cozev.org/initiativesfeed/join-zero-emission-maritime-buyers-alliance.

[5] Deng, S. and Z. Mi (2023), “A review on carbon emissions of global shipping”, Marine Development, Vol. 1/4, https://doi.org/10.1007/s44312-023-00001-2.

[10] DNV (2024), Energy Transition Outlook 2024: Maritime Forecast to 2050: A deep dive into shipping’s decarbonization journey, https://www.dnv.com/maritime/publications/maritime-forecast/.

[9] DNV (2023), Energy Transition Outlook 2023: Maritime Forecast to 2050: A deep dive into shipping’s decarbonization journey, https://www.dnv.com/maritime/publications/maritime-forecast-2023/download-the-report.html.

[12] European Commission (2023), Reducing emissions from the shipping sector, https://climate.ec.europa.eu/eu-action/transport-emissions/reducing-emissions-shipping-sector_en.

[6] Fricaudet, M. et al. (2022), Exploring methods for understanding stranded value: case study on LNG capable ships, https://discovery.ucl.ac.uk/id/eprint/10156288/1/Fricaudet%20et%20al.%20%282022%29%20Stranded%20value%20-%20case%20study%20on%20LNG-capable%20ships.pdf.

[8] Global Maritime Forum (2020), The scale of investment needed to decarbonize international shipping, https://globalmaritimeforum.org/news/the-scale-of-investment-needed-to-decarbonize-international-shipping/.

[11] International Maritime Organization (2023), 2023 IMO Strategy on Reduction of GHG Emissions from Ships, https://www.imo.org/en/OurWork/Environment/Pages/2023-IMO-Strategy-on-Reduction-of-GHG-Emissions-from-Ships.aspx#:~:text=The%202023%20IMO%20GHG%20Strategy%20envisages%2C%20in%20particular%2C%20a%20reduction,at%20least%2040%25%20by%202030.

[2] International Maritime Organization (2020), Fourth Greenhouse Gas Study, https://wwwcdn.imo.org/localresources/en/OurWork/Environment/Documents/Fourth%20IMO%20GHG%20Study%202020%20-%20Full%20report%20and%20annexes.pdf.

[13] International Maritime Organization (n.d.), Mid- and long-term GHG reduction measures, https://www.imo.org/en/OurWork/Environment/Pages/Mid--and-long-term-GHG-reduction-measures.aspx (accessed on  2025).

[1] UNCTAD (2024), Review of Maritime Transport 2024: navigating maritime chokepoints, https://unctad.org/system/files/official-document/rmt2024_en.pdf.

Note

← 1.  In Q4 2024, the share of Chinese shipbuilders in the total orderbook (in CGT) was 55% (vs. 47% in the alternative fuel capable orderbook). Korean shipbuilders’ share of the total orderbook was 25% (vs. 42% in the alternative fuel capable orderbook).