The Environmental Defense Fund (EDF) and Lloyd’s Register Maritime Decarbonisation Hub (Decarb Hub), a partnership between Lloyd’s Register Group and Lloyd’s Register Foundation, have published ‘Navigating the Net-Zero Transition’ – exploring innovative concepts to close the trillion-plus investment gap threatening the sector’s climate goals.
The report, which builds on two years of research, presents insights across the maritime value chain leveraging over 40 interviews with shipowners, financiers, fuel developers, insurers, academics and NGOs, in response to warnings that shipping emissions could reach 130% of 2008 levels by 2050 without adequate funding.
Guillaume Morauw, Sustainable Finance Senior Policy Analyst, EDF, said: “Without strong action, emissions from maritime shipping are projected to rise, putting the sector far off track to transition away from fossil fuels by 2050.”
Maritime shipping plays a unique role in the global economy, carrying nearly 80% of global trade and being the sixth largest emitter of GHG emissions globally, which makes the sector’s decarbonisation challenge especially acute. The sheer capital expenditure intensity of ships and fuel infrastructure creates major financing needs to achieve the sector’s transition away from fossil fuels. Recent progress to tackle harmful emissions, including the IMO approval of a framework that would make maritime shipping the first sector to pay a price on emissions, risks stalling without sufficient support from public and private financiers.
Report co-author Morauw said: “Additional, innovative mechanisms to de-risk projects and channel capital at scale are essential. By backing energy-saving retrofits, the lending platform helps shipowners cut emissions and mitigate transition risks, while giving financiers a practical way to make an impact and decarbonise their portfolios.”
Investors’ climate ambitions can often clash with shipping’s realities of high baseline emissions and limited zero-emission options. This disconnect is already evident: a survey from 2023 states that senior finance professionals contemplate divesting from maritime due to ESG risks, ultimately making affordable capital harder to secure especially for smaller shipowners.
Financiers remain cautious about one of the toughest industries to decarbonise, while scaling zero- and near-zero emission fuel projects demands huge capital expenditure, in some cases up to US$ 2bn for infrastructure, storage and terminal facilities.
Dana Rodriguez, Programme Manager, The Decarb Hub, said: “These challenges are evident in the lack of communication between shipping and infrastructure finance, despite their interdependence. To overcome this, fuel procurement strategies must evolve, and bold collaboration across the maritime value chain is critical.”
The report explores three concepts to help unlock investments by de-risking projects, broadening access to affordable capital and showing the wider benefits of decarbonisation:
Rodriguez added: “Silos are holding back shipping’s transition. Finance and shipping must meet in the middle to deliver a sustainable and affordable transition.”
EDF and the Decarb Hub are now inviting feedback from stakeholders to help refine the concepts and move them toward commercial viability. They also invite partners – including banks, shipowners, fuel developers and public finance institutions – to take part in pilot projects that put these ideas into practice. The report can be downloaded here.
