The global shipping industry is grappling with increasing pressure to cut greenhouse gas emissions as new regulations from the European Union (EU) and the International Maritime Organization (IMO) take effect. The IMO has set an ambitious target to reduce maritime greenhouse gas emissions by at least 40% by 2030. Meanwhile, the EU aims for a combined 55% reduction across the shipping, aviation, and energy sectors.

Starting in 2025, the EU will require shipping companies to surrender carbon credits to cover 40% of their reported emissions. This requirement will rise to 70% in 2026 and reach 100% by 2027. However, the industry faces significant challenges in meeting these goals due to the current limitations in technology and infrastructure.

"The shipping industry is under immense pressure to decarbonize, but it is struggling to keep up with these tightening regulations," says Antonia Panayides, a transportation attorney with Reed Smith. Panayides acknowledges that while the industry can eventually achieve substantial reductions in emissions, it will require considerable time, financial investment, and commitment from global governments to develop the necessary resources.

At present, liquefied natural gas (LNG) is the primary alternative to traditional marine fuels. Although LNG produces less CO2, it is considered a temporary solution due to its high cost, specialized storage requirements, and methane leakage issues. Long-term alternatives such as methanol, ammonia, and hydrogen are being explored, but each comes with its own set of challenges. Methanol is easier to store but is highly flammable and requires larger fuel tanks. Ammonia and hydrogen, while producing minimal CO2, are associated with high leakage risks and complex storage needs.
Panayides emphasizes that the industry is still in the testing phase for these green fuel options. "If a ship owner is considering building a new vessel now, the choice of fuel remains uncertain," she notes.

To support the transition to green fuels, Panayides suggests that global governments need to collaborate with the shipping industry to enhance the capacity for sustainable fuel production, develop efficient delivery systems, and ensure safe storage solutions. "While there is widespread recognition of the environmental benefits, the necessary changes will take time, and regulations should reflect the industry’s current capabilities and limitations."