This chapter provides an assessment of the capabilities of selected shipbuilders to develop and construct low/zero-emission vessels and support the increased adoption of new (including digital) technologies. The methodology employed aims to evaluate the extent of alignment between the existing manufacturing practices and low/zero-emission technology development and digitalisation strategies of major shipbuilding companies with the decarbonisation targets established by the IMO, which aims for net-zero shipping “by and around, i.e. close to, 2050”.
The Role of Shipbuilding in Maritime Decarbonisation
Impacts of Technology Developments and Policy Measures
Abstract
This chapter provides an analysis of the decarbonisation targets and strategies of major shipbuilding companies in their respective regions, yielding key insights:
Not all major shipbuilding companies have set net-zero emissions targets: while most large shipbuilders in the company mapping report net-zero targets for their operations, including Scope 3 emissions, not all explicitly align with net-zero ambitions (7 companies do not have a net-zero by 2050 target). Companies in Korea and Europe generally adopt stricter targets and strategies, reflecting regional variations in net-zero commitment.
Company strategies emphasise the construction of low/zero-emission vessels: most major shipbuilding companies are actively supporting the adoption of low or zero-emission technologies and the integration of alternative-fuel capable vessels into the global fleet. They frequently participate in demonstration projects showcasing new technologies, underscoring their role in advancing maritime sustainability.
Digital and ‘Just Transition’ aspects are included in company strategies: several companies emphasise the importance of digitalisation (for both marine technologies during ship operations and ship construction) as well as a ‘Just Transition’, including the development of green and smart skills.
ESG reporting has increased but access to green finance instruments remains limited: there is a widespread commitment to adhering to ESG reporting standards (10 companies adhere to standardised ESG reporting method) and some companies utilise green finance instruments, such as sustainability-backed bonds or loans. However, this practice remains limited to a few frontrunners (3 companies reported).
Company size matters for decarbonisation ambition: larger companies tend to display more ambitious targets and strategies for decarbonisation and digitalisation. Those with ambitious targets often achieve notable results in sustainability, digital transition, and green finance indicators. This suggests that ‘First Movers’ might be setting a benchmark for the industry, highlighting the importance of ensuring that the rest of the sector follows suit in the transition to net-zero.
Shipbuilders are adopting company strategies across several targets— from reducing GHG emissions in the manufacturing process to supporting the integration of alternative fuels and energy efficiency in vessels and advancing digitalisation. Studying these targets and strategies provides insight into the industry’s priorities and the extent to which they align with national and international decarbonisation, digitalisation and resilience decarbonisation goals. Furthermore, the analysis seeks to provide an overview of the shipbuilding industry’s landscape, focusing on key aspects such as net-zero and automation objectives, strategic roadmaps, technological developments, data availability, green financing strategies and research and development (R&D) investments in digital and low/zero-emission technologies. It is based on an examination of company reports and initiatives pertinent to decarbonisation and digitalisation efforts within the sector.
The analysis focuses on prominent shipbuilders across various regions, specifically targeting the major shipbuilding companies of China, Korea, Japan and the European Union. Shipbuilding companies were selected according to the following criteria: fleet size, orderbook, revenue and employee count. Relevant data were collected from Clarksons Shipping Intelligence Network (SIN), Clarksons WFR and ORBIS. The top three shipbuilder groups from each region were selected based on their contribution to global ship production and the availability of sustainability reports at the group level. Several large shipbuilders per region had to be excluded from the analysis due to a lack of available data on their decarbonisation/ digitalisation efforts.
Table 4.1 provides a list of the selected shipbuilders. For China, four shipbuilders have been selected to reflect the importance of Chinese shipbuilding in the current orderbook. For Korea, Japan and Europe three shipbuilding companies are selected each. For the Rest of World (ROW), two companies are selected. Figure 4.1 shows their total ship completions and CGT in the global fleet and current orderbook, as an estimate of capacity.
Note: *Data on vessel completions for the fleet by Hanwha Group is incomplete as the company was previously Daewoo Shipbuilding & Marine Engineering Co., Ltd. (DSME), and historical data from that period has not been fully integrated.
Source: Authors’ elaborations based on Shipping Intelligence Network, Clarkson Research, https://sin.clarksons.net/, as of January 2024.
4.1.1. Criteria for assessment
The research methodology employs a set of indicators informed by disclosure framework assessment methodologies from entities like the Science Based Targets initiative (SBTi) sector (Science Based Targets, 2021[1]), as well as previous analysis carried by the OECD on firms’ decarbonisation efforts in the steel sector (OECD, 2024[2]). These indicators are designed to determine each shipbuilding company’s alignment with a net-zero 2050 target, covering aspects such as emission reduction targets, green vessel technology targets, decarbonisation strategies, digitalisation strategies, participation in voluntary initiatives, data disclosure practices, investment in R&D for decarbonisation, green financing, and climate-related risk assessments.
Table 4.2 gives on overview of the key indicators assessed as well as the assessment criteria. Information is gathered from annual reports, company websites and newsroom articles, focusing on the shipbuilders’ efforts towards decarbonisation during the vessel operation and construction phase. The analysis does not cover strategies that extend beyond the shipbuilder company, such as the development of green ports or alternative fuel supply infrastructure.
The following section gives an overview of the key findings from the selected shipbuilding companies. It includes findings on 1) targets and GHG emissions, 2) company strategies (including decarbonisation, digitalisation and ‘Just Transition’ strategies), and 3) ESG reporting and voluntary initiatives.
4.2.1. Targets and GHG emissions
Most companies included in the mapping have committed to achieving net-zero emissions by 2050. Notably, Hanwha stands out for setting a target of reaching net-zero by 2045. Conversely, Chinese firms deviate from this trend, aligning instead with their national government’s objective of attaining carbon neutrality before 2060. Four companies have not specified a clear net-zero target date. Korean shipbuilding companies, overall, demonstrate the most stringent approach to their decarbonisation commitments, uniformly aligning with the net-zero by 2050 goal (Figure 4.2).
Note: “No net-zero target” is defined as no explicit target to reach net-zero emissions by a specified date, the company may include other targets, e.g., on energy usage or relative emissions reductions.
Among the companies with established net-zero targets, an analysis of their emissions scope reveals varying degrees of inclusion. As a reminder:
Scope 1 emissions are direct emissions from company-owned and controlled resources.
Scope 2 emissions cover indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company.
Scope 3 emissions include all other indirect emissions that occur in a company’s value chain, including both upstream and downstream emissions (Science Based Targets, 2023[3]).
Most shipbuilding companies have committed to addressing Scope 1, 2, and 3 emissions, showing a comprehensive approach to decarbonisation that encompasses direct and indirect emissions throughout their value chain. Some companies have a narrower focus, primarily on Scope 1 and 2, which pertains to the direct emissions from their operations and the indirect emissions from the energy they procure. Three companies have not explicitly stated which scope their net-zero targets encompass, leaving ambiguity regarding the breadth of their emissions reduction commitments (Figure 4.3).
4.2.2. Strategies by target area
In analysing major shipbuilders’ decarbonisation strategies, the focus is on the existence and specifics of decarbonisation plans, the promotion of clean technologies and alternative fuels, and the role of carbon credits or offsets. Additionally, the strategies are studied for how they address digitalisation and incorporate considerations for workforce transition and skills development in support of industry transformation.
Decarbonisation strategies focus on shipbuilders’ impact on the environment, energy efficiency and new technology uptake. As seen in Figure 4.4, company strategies show a strong focus on environmental protection (covered by 15 companies). Energy efficiency and savings are also prominently featured, along with the shift towards renewable energy sources and the development of green technologies (15 companies). In contrast, only three shipbuilding companies mention the use of carbon offsets as a strategy for balancing emissions. Exceptions include Samsung Heavy Industries, which is implementing an internal carbon pricing scheme. Moreover, while not as frequently highlighted, green R&D is explicitly addressed by 8 shipbuilding companies, with reports including annual R&D expenditure and descriptions of specific research programmes.
Leading shipbuilders’ strategies point to increasing R&D for green and smart solutions. Key technologies highlighted in company reporting to enhance energy efficiency and reduce emissions are improved hull designs, propellers and ducts, as well as technologies for alternative fuels like LNG, ammonia, methanol and hydrogen. The integration of digital technologies is also evident, for example developments for Maritime Autonomous Surface Ships (MASS) or monitoring vessel performance in actual sea conditions.
To support these innovations, dedicated research institutes within the industry, such as Hyundai Maritime Research Institute, as well as national innovation platforms are being utilised. Collaborations with research institutes and universities are further employed to drive the development of energy-efficient and emission-reducing solutions. Chinese shipbuilder CSSC stands out with 63 national innovation platforms, collaborating closely with public institutions. Most shipbuilding companies in the studied sample commit to a series of low/zero-carbon projects over the next decade.
Note: “Low-carbon” refers to low/zero-emission technologies, these can be technologies related to alternative low/zero-emission fuels or ESTs.
Support for digitalisation is highlighted across major shipbuilders. Examining digitalisation efforts more closely, most companies make a general reference to “increasing digitalisation” or developing “digital solutions”. A significant focus is put on developing smart solutions and constructing smart ships, indicating a move towards integrating advanced technologies in shipbuilding. Four companies explicitly highlight their strategy to transform their facilities into smart shipyards, which involves adopting digital tools and systems to enhance efficiency and productivity. Six companies have further adopted initiatives to develop employees’ skills for an increasingly digital work environment (Figure 4.5).
Shipbuilders emphasise employee health, well-being, and workforce development in their reporting. Supporting a just transition— that is, shifting the industry towards new practices equitably, while safeguarding employment, fostering skill development, and providing social protection for workers and communities— is a target most companies highlight in their reporting and information sharing. Emphasis on employee health and well-being is a common thread. Ten companies specifically underscore the development of “clean” skills associated with low/zero-emission solutions, though there is room for more concrete strategies from others. Additionally, a handful of companies spotlight their support for the broader local community (Figure 4.6). These efforts align with the principles outlined in the 2023 IMO GHG Strategy calls for a “just and equitable transition”, including upskilling and supporting seafarers and providing assistance to Least Developed Countries (LDCs) and Small Island Developing States (SIDS) to ensure a fair shift toward net-zero shipping globally (International Maritime Organization, 2023[4]).
4.2.3. ESG reporting and voluntary initiatives
Access to finance is crucial for investments in new vessel construction and industry transformation, necessitating increased compliance with ESG (Environmental, Social, Governance) indicators. Half the companies in the mapping adhere to standardised, international ESG reporting methodologies, such as the Global Reporting Initiative (GRI). Additionally, seven companies utilise standardised Co2 management methodologies, including certifications like the Co2 Reduction Management scheme aligned with the ISO 14001 “Environmental Management” standard and the ISO 14051 “Material Flow Cost Accounting” standard (see Figure 4.7).
Several companies follow the Task Force on Climate-related Financial Disclosures (TCFD) guidelines, reflecting a broad commitment to transparency in climate-related financial risk reporting. However, none of the companies surveyed have adopted the SBTi, a framework encouraging organisations to set emissions reduction targets in line with climate science. Five companies lack adherence to a standardised ESG reporting method, and three do not provide information on ESG indicators, highlighting areas for improvement in ESG transparency and accountability.
Most leading shipbuilders have not issued green bonds or loans (or do not report it), with the exception of Fincantieri SpA, Hyundai Heavy Industries and Seatrium Ltd. Fincantieri SpA secured three major sustainability-linked loans: a EUR 300 million construction loan in 2021 with Intesa Sanpaolo and CDP for a cruise ship, a EUR 500 million revolving credit in 2022 with Intesa Sanpaolo, and a EUR 700 million guarantees facility in 2023 with BNP Paribas (Fincantieri, 2023[5]). Hyundai Heavy Industries reported a USD 300 million Senior Unsecured Green Bond in 2023, backed by the Korean Development Bank (KDB). Seatrium Ltd. issued two sustainability backed USD 500 million loans in 2021 and 2023, reported on the Singapore Exchange (SGX) (Clarksons Shipping Intelligence Network, 2024[6]).
Actors across the maritime industry are pursuing decarbonisation targets through voluntary initiatives and public-private partnerships. They include a variety of decarbonisation initiatives linked to fostering demand and supply of low-carbon fuel and technology alternatives, such as voluntary commitments to stricter operational standards for ship owners and operators or innovation networks to improve the technology and commercial readiness of low-carbon technologies. Further, they can finance initiatives that favour ‘climate-aligned’ companies, such as the Poseidon Principles for financial institutions (Poseidon Principles, n.d.[7]), and that can help incentivise shipping companies to invest in low-carbon technologies and practices to reduce their emissions.
Most major shipbuilding companies engage in voluntary collaborations with other businesses, governments and academic institutions at various levels—international, regional and national (Figure 4.8). Internationally, examples include the Getting to Zero Coalition and the UN Global Compact, while regionally, the focus is primarily on European Union initiatives, such as Zero-Emission Waterborne Transport (ZEWT). Nationally, collaborations often occur among shipbuilders from the same country or with governmental bodies. It is noteworthy that shipbuilders’ participation in international efforts tends to be directed towards broader maritime sector concerns or cross-industry issues, whereas regional and national involvements often zoom in on shipbuilding-specific or technology-driven agendas. Fincantieri SpA shows a particularly diverse mix of initiatives, predominantly within EU programmes like the ZEWT and various national projects. Six shipbuilders do not engage in any reported voluntary initiatives.
Note: It is possible for one company to be included several times in a jurisdiction, e.g. if company has national initiatives relating both to shipbuilding and horizontal.
References
[6] Clarksons Shipping Intelligence Network (2024), Capital Markets - Green Issuances, https://sin.clarksons.net/.
[5] Fincantieri (2023), Unstoppable growth for sustainable finance in europe – in 2021 over €300 billion in bond and loan issuance, https://www.fincantieri.com/en/sustainability/sustainability-stories/green-finance/.
[4] 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] OECD (2024), “Addressing steel decarbonisation challenges for industry and policy”, OECD Science, Technology and Industry Policy Papers, No. 171, OECD Publishing, Paris, https://doi.org/10.1787/e6cb2f3c-en.
[7] Poseidon Principles (n.d.), A global framework for responsible ship finance, https://www.poseidonprinciples.org/finance/#about (accessed on 21 September 2024).
[3] Science Based Targets (2023), SBTi Corporate Manual: TVT-INF-002 | Version 2.1, https://sciencebasedtargets.org/resources/files/SBTi-Corporate-Manual.pdf.
[1] Science Based Targets (2021), Understand the methods for science-based climate action, https://sciencebasedtargets.org/news/understand-science-based-targets-methods-climate-action.