Decarbonization: The Most Urgent Issue for the Shipping Sector in 2025

WPB: In recent years, major carbon-emitting industries have observed the emergence of strategies to cut emissions, with financial institutions playing a crucial role in linking producers and consumers of low-emission fuels. These connections facilitate the swift expansion and widespread implementation of cleaner energy solutions.

Industries with high emissions, particularly shipping, contribute nearly 40% of global CO₂ output. Although no single remedy can fully address the decarbonization challenge for such industries, a series of targeted initiatives can collectively drive a large-scale transition away from fossil fuels.

Various methods contribute to this shift, including adding ethanol to gasoline, incorporating recycled cooking oils or plant-derived oils into diesel, adopting renewable energy sources in place of conventional power, and utilizing gases derived from organic waste.

As regulatory frameworks tighten and public scrutiny intensifies, two industries that emit substantial greenhouse gases—shipping and aviation—face particularly significant hurdles in reducing their carbon footprint.

Constraints related to weight, volume, and long-distance travel make battery-powered alternatives impractical for large cargo ships and commercial aircraft. Although smaller-scale innovations such as algae-based biofuels and vessels powered by hydrogen or ammonia exist, they either suffer from limited scalability or require costly retrofitting, making widespread adoption challenging.

Can Biomethane Be the Ideal Solution?

Among the various low-carbon fuel alternatives for shipping, biogas-derived fuels are gaining traction. According to The Maersk Mc-Kinney Møller Center, biogas fuels could account for between 19% and 37% of deep-sea shipping’s total fuel mix by 2050. One of the most promising candidates in this category is biomethane and its marine fuel derivatives.

Biomethane, produced from methane present in organic waste, shares a nearly identical chemical structure with natural gas. It can be seamlessly integrated into existing gas grids and then processed into hydrocarbons tailored to specific industrial needs. The fuel has negligible sulfur content and can even exhibit negative carbon intensity, making it a highly attractive low-emission alternative.

Infrastructure and Logistics Benefits

A significant advantage of biomethane is its logistical compatibility with existing infrastructure. Ports are often situated near urban centers, making it easier to link them with existing gas networks. This eliminates the necessity for dedicated Natural Gas Liquids (NGL) supply chains for fueling stations, significantly enhancing the scalability of biomethane production.

Although the technology behind biomethane is not groundbreaking, its on-site production potentialmakes it a much more cost-effective alternative than other competing low-carbon marine fuels.

Offsetting Carbon Emissions

The International Energy Agency (IEA) forecasts that by 2050, alternative fuels—including biofuels, hydrogen, ammonia, and methanol—will constitute 85% of the shipping sector’s total energy use. However, until these fuels become a dominant component of daily operations, the industry must confront its current carbon footprint.

Companies that have access to non-fossil energy sources are likely to transition towards them—either due to regulatory obligations, pressure from investors, or corporate sustainability commitments.

For operators without immediate alternatives, carbon offsetting remains an essential strategy. This involves funding carbon capture projects to neutralize emissions and claiming net-zero statusdespite continuing fossil fuel use.

Regulatory Challenges and the Transition to Cleaner Shipping

CSC Commodities, a subsidiary of Marex, has been engaged in oil derivatives trading and emissions management for over a decade. The firm anticipates that carbon markets are approaching a critical turning point, with significant shifts in supply and demand dynamics.

A major regulatory milestone is the FuelEU Maritime directive, which came into effect on January 1, 2025. This legislation mandates gradual reductions in greenhouse gas emissions from shipping fuels, starting with a 2% reduction in 2025, and progressively tightening to an 80% reduction by 2050.

Additionally, ships—particularly container and passenger vessels—must utilize onshore power sources or zero-emission technologies while docked. This policy is expected to accelerate investment in low-carbon fuels and supporting infrastructure, increasing interest in alternatives like biomethane.

Simultaneously, the inclusion of shipping in the EU Emissions Trading System (ETS) introduces dual pressures on shipowners. They must adopt cleaner fuel options while simultaneously managing the financial burden of purchasing emissions allowances.

The industry recalls the disruptive impact of the IMO 2020 regulations, which enforced strict sulfur limits on marine fuels. The International Maritime Organization (IMO) has so far allowed individual regions to decide whether to incorporate shipping into carbon trading and emissions reduction programs.

However, given the growing climate crisis and heightened public awareness, it is only a matter of time before the shipping industry faces mandatory carbon offset requirements. These new obligations will likely include:

 • Adoption of zero-carbon fuels

 • Implementation of an emissions tax under the ETS

 • Mandatory participation in carbon offset schemes

A Path to Compliance Through Biomethane

Navigating the evolving regulatory landscape will be a formidable challenge. However, the incorporation of biomethane as a marine fuel presents a viable route toward regulatory compliance and environmental sustainability.

In this context, ongoing conversations surrounding shipping’s emissions reduction efforts remain crucial.

By Bitumenmag

Bitumen, Shipping, Journal