Why does this matter?  Shipping is a major emitter of greenhouse gases, responsible for 3% of global emissions. Yet, the industry is not covered by the Paris Agreement, posing a significant regulatory gap. In 2023, IMO member states agreed to a goal of achieving net-zero emissions by 2050, with interim targets of reducing emissions by 30% by 2030 and 80% by 2040 compared with a 2008 baseline.

However, the initial agreement did not specify how net zero would be achieved and negotiations on concrete measures have been slow-moving. The latest framework represents a breakthrough with the newly agreed policies slated to shape the trajectory of global shipping going forward.

The new emissions intensity targets have been reduced to 4% in 2028, which will rise to 30% in 2035. And an upper target of17% by 2028 increased  to 43% in 2035. To meet these targets ships are expected to switch to less polluting fuels.

Ships unable to sufficiently reduce their emissions will pay a penalty. If failing to meet the lower targets, ships can purchase “remedial units”  at $380 per unit, which funds the newly established “net-zero fund”. Or, in a carbon credit-style exchange, ships could purchase surplus units from others that have excelled in reducing carbon intensity.

The second tier of penalty applies to ships that meet the lower targets but fail to reach the more stringent upper aims. These ship owners would pay $100 per unit into the net-zero fund. Overall, these agreed costs and targets fall roughly in the middle of targets proposed by member countries.

Two companies in the Ocean 14 Capital portfolio are uniquely positioned to support the IMO’s shift towards cleaner fuels and carbon pricing,  Sofar Ocean, for example, provides crucial ocean data that optimises vessel performance. The company’s high-accuracy weather forecasts and performance models help ships reduce fuel consumption and emissions by providing optimised routing.

Given the IMO’s new rules, Sofar Ocean’s solutions can support the maritime industry’s efforts to meet emission reduction targets, improving fuel efficiency and lowering overall emissions.

Meanwhile, Goodcarbon enables businesses to build long-term carbon credit portfolios through nature-based assets. Its platform supports projects like reforestation and land conservation, which contribute to offsetting carbon emissions. Though they have focused on land-based projects, Goodcarbon is well positioned to become a key player for the maritime industry.

With the IMO’s focus on carbon pricing, Goodcarbon’s solutions offer a vital tool for companies in the shipping industry to meet emissions targets while supporting the transition to a net-zero future.

Although the deal at the IMO represents a significant shift in global maritime regulations, the framework is not without controversy. Some emerging economies and oil-producing nations, such as Saudi Arabia, opposed the carbon pricing measures, arguing they would place a financial burden on global trade and raise commodity prices.

The US also withdrew partway through the negotiations, calling the carbon pricing system “blatantly unfair.” Despite the opposition, the deal was passed through a majority vote, with the framework aiming to raise funds for climate action, including supporting the adoption of low-carbon fuels.

Some critique has been cited by the UCL and the NGO coalition Transport and Environment. which found that the framework would be insufficient to meet the new targets, given that 90% of emissions will escape penalties under the IMO’s rules. The UCL research group sees this agreement as “weak” and a watering down of previous targets from the IMO.

The IMO’s historic agreement takes a crucial step toward reducing shipping emissions, setting clear targets and penalties for non-compliance. Yet, many critics argue that the deal lacks the urgency and ambition required to align with global climate goals, especially as it faces resistance from key stakeholders. Success of the agreement will depend on stronger actions and broader collaboration in the coming years.

Why does this matter? Decarbonising the shipping sector offers an opportunity to drastically reduce global emissions and align with the Paris Agreement’s climate objectives.

Innovations such as Sofar Ocean’s Wayfinder platform, which uses real-time ocean data to optimise routes and minimise fuel consumption, exemplify how technology can drive transformative change. Additionally, the regulatory atmosphere is further incentivising the green transition for the shipping sector.

Two major policy changes are forthcoming – the EU’s FuelEU Maritime Regulation came into effect on the 1 January this year,  while the UK has proposed the inclusion of shipping in its Emissions Trading Scheme (ETS) by 2026 – which are pivotal in encouraging low-carbon practices.

A primary barrier to lower carbon shipping is cost. Fuels such as biomethane, produced from organic waste including manure cost nearly double that of liquefied natural gas – $21.03 per Gigajoule versus $11.90, respectively, making widespread adoption financially daunting. A second challenge to a green marine transition is the training required to safely and correctly use alternative fuels.

A computer-modelled study suggests that the shift requires upskilling an estimated 450,000 seafarers by 2030 to safely manage hazardous fuels like ammonia, expected to rise to 800,000 by the mid-2030s.

Technological gaps also compound the difficulty. New equipment for emissions reduction and fuel efficiency requires heavy investment without assured returns. Furthermore, regulatory uncertainties make it difficult for shipping companies to plan and attract capital for green transitions.

Despite these obstacles, industry collaboration is yielding promising results. The Zero Emission Maritime Buyers Alliance (ZEMBA), comprising major companies including Amazon and Ikea, is incentivising the use of low-carbon fuels by absorbing the cost premium.

Through this initiative, vessels operated by German Hapag-Lloyd travelling from Rotterdam to East Asia from 2025 will run on biomethane. This is expected to prevent 82,000 mt of CO2 emissions over two years.

The most promising alternative fuels to decarbonise the shipping sector are biomethane, ammonia and hydrogen. Biomethane, derived from organic waste, can reduce emissions by 90% compared to traditional marine fuels.

However, its cost and limited supply pose challenges. Green ammonia, a carbon-free fuel, is created by combining renewable hydrogen from water electrolysis and nitrogen separated from air in a modified Haber-Bosch process, powered entirely by renewable energy.

Ammonia and hydrogen are emerging as viable alternatives, though their adoption requires significant investment in safety measures and port infrastructure.

Beyond fuels, advancements in ship design and digital tools, such as real-time emissions monitoring, are critical to improving efficiency and sustainability.

Sofar Ocean’s global network of ocean sensors provides accurate weather forecasts and performance models, helping vessels optimise their routes. These innovations reduce emissions while offering a scalable solution for the industry.

The road ahead is increasingly defined by collaboration and regulation. The Maritime Decarbonisation Conference in Singapore in April may provide valuable insights into green financing trends and innovative solutions.

Meanwhile, the  FuelEU Maritime Regulation and the UK’s proposed expansion of the ETS will likely accelerate the adoption of low-carbon fuels and energy-efficient practices. Initiatives like the North Sea Green Shipping Corridor, a zero-emissions route, highlight the potential for transformative projects.

Extending carbon credit schemes to shipping could further incentivise investment in sustainable practices, unlocking new opportunities for the sector. Shipping has the potential to transition from an emissions-intensive industry to a global exemplar of sustainable trade.

Why does this matter? International shipping is a fundamental facet of the global economy and trading network, facilitating the international transfer of goods. Artificial waterways are a crucial component, cutting thousands of miles from sea routes.

The Suez Canal, for example, connects the Mediterranean to the Red Sea, saving 6,000 nautical miles and reducing delivery times by three to four weeks compared to routing around Africa.

Last year, 24,000 vessels passed through the Suez Canal, carrying 10% of global seaborne trade. Disruptions to this waterway are costly – the last time shippers faced an impassable Suez Canal was in 2021 when the Ever Given cargo ship ran aground, estimated to have held up $9.6bn worth of trade per day.

The impact of shipping remains high even in the absence of disruptions to routes, accounting for around 3% of global emissions – roughly equivalent to the aviation sector. Estimates suggest that shipping could represent 10% of global emissions by 2050 if current growth rates continue unabated. Shipping executives are reportedly cautious to restart operations in the Red Sea region, suggesting elevated shipping emissions are likely to continue for some time.

The shipping industry has taken steps to increase fuel economy and decrease emissions in recent years. For example, ships have followed a “slow steaming” policy over the last decade, which involves reducing operational speed, conserving fuel, and cutting emissions of CO2 and air pollutants.

However, shipping giants Møller-Maersk and Hapag-Lloyd have announced they are suspending this practice and increasing vessel speeds due to the additional time the alternative route enforces.

The shipping industry is likely to face increasing regulation in the coming years. In July 2023, the International Maritime Organization (IMO) announced stricter decarbonisation targets, including a goal of achieving net-zero emissions from international shipping “close to” 2050.

The body also established interim goals of reducing emissions by 20-30% by 2030 and 70-80% by 2040, compared to 2008 levels. The current geopolitical crisis in the Middle East poses a serious risk to these goals, sending the industry’s emissions in the wrong direction.

The Suez Canal is not the only major waterway facing significant reductions in traffic. Drought in Central America has severely impacted maritime trade passing through the Panama Canal, which links the Caribbean Sea with the Pacific Ocean.

Around 2.5% of seaborne trade passes through the canal, but due to a severe drought-induced reduction to the level of the Gatun Lake that feeds the waterway, the canal’s water levels are far lower than usual. Consequently, the Panama Canal Authority has reduced traffic through the corridor by approximately 40% this year.

Addressing this issue, SOFAR Ocean have deployed the world’s largest privately-owned network of ocean sensors. Each day, this network provides the company with over 1.5 million observations, populating marine weather models up to 50% more accurately than traditional models.

This is combined with vessel performance models – used to determine high-accuracy speed and fuel predictions – to create the powerful Wayfinder platform. This data-driven service reduces voyage time, fuel and emissions by 4-6% on average, presenting an attractive option for the maritime industry in the face of an escalating crisis.

Covering the years 1996 to 2020, the research highlights that 55-60% of the CO2 released from the seabed during this practice enters the atmosphere within nine years.

This revelation could potentially double the estimated annual fuel combustion emissions of the global fishing fleet. The discharged carbon also contributes to local acidification and diminishes the ocean’s ability to absorb CO2, according to the analysis. (The Guardian)

As the largest carbon sink on Earth, the ocean must be conserved. Scientists have long been aware that bottom trawling – the process by which a quarter of all wild seafood is caught, including shrimp, pollock, and scallops – releases carbon from the seabed.

However, this study is the first to quantify the specific amounts of CO2 generated by this method. The researchers argue that the quantities are too substantial to ignore and lead to “marine deforestation,” causing irreparable harm to the environment, wildlife, society, and the climate.

Consequently, bottom trawling has already faced restrictions in certain areas in the US and Canada, while the UK announced further restrictions on the damaging practise today.

The study utilised information from a vessel-tracking database processed by Global Fishing Watch. It is the first to demonstrate that over half of the CO2 released by bottom trawling ultimately enters the atmosphere, contributing to global warming.

However, the researchers warn that their calculations may underestimate the amount of CO2 released into the atmosphere by trawlers, as 75% of fishing vessels are not publicly tracked.

Building upon prior research published by members of the study team, it was discovered that bottom trawling releases a comparable amount of CO2 to the entire aviation sector. This report emphasised that only 7% of the ocean currently benefits from some form of protection.

Advocating for proactive measures, the researchers proposed the identification and designation of strategic ocean areas for stewardship. These areas could encompass locations exposed to large-scale industrial fishing, key economic exclusion zones, and marine territories.

The scientists asserted that safeguarding such “strategic” areas has the potential to yield 8 million tonnes of seafood as fish stocks return to healthy levels/

The research highlights that the top 10 countries responsible for emissions from bottom trawling are China, Russia, Italy, the UK, Denmark, France, the Netherlands, Norway, Croatia, and Spain. Further, “hotspots” in the East China Sea, the Baltic, the North Sea, and the Greenland Sea are identified as the locations with the highest emissions.

Targeting regulation at these countries and hotspots may prove crucial in the fight against bottom trawling. Emissions from bottom trawling are currently not included in global emissions totals or policies.

Enric Sala of the National Geographic Society argues that the impact of CO2 emissions from such trawling is comparable to atmospheric emissions and should be included in the Paris Agreement considerations.

This inclusion could double the estimated annual emissions from fuel combustion of the global fishing fleet, which consists of approximately 4 million vessels.

Aside from emissions, bottom trawling is devastating to aquatic ecosystems, destroying almost all bottom-dwelling plants and animals in its path. As a non-selective technique, bycatch is common, with the practice accounting for 92% of recorded fisheries discards in the EU.

It is also responsible for the bycatch of vulnerable species such as sharks, rays, sea turtles, and cetaceans. The removal of these keystone species undermines entire ecosystems, causing impacts that reverberate throughout the food chain.

Today, innovative solutions seek to reduce the environmental damage caused by bottom trawling and its associated emissions. AVA Ocean’s precise seabed harvester is one example.

Here, scallops are gently and efficiently picked from the ocean floor. The harvester has a low impact on the benthic sediment and low bycatch rates due to its ability to identify, select and sort bottom-dwelling species.

As a result, the company were awarded the first commercial licence for Arctic scallops in Norway since the early 1990s, where dredging has been banned for 30 years. A timeline detailing the development of bottom trawling technology can be seen below.