What is the Cost of Greener Shipping?
Shipping plays a pivotal role in the global economy, facilitating around 80% of world merchandise trade by volume1. However, its environmental footprint has become a growing concern. In 2024, shipping accounted for roughly 3% of global greenhouse gas (GHG) emissions2, releasing around 1,000 MtCO2e. Without significant intervention3, this share could climb to 17% by 2050. This trajectory highlights the urgent need for decisive climate action in the maritime sector.
In response, the International Maritime Organization (IMO) has adopted ambitious decarbonisation targets aiming for net-zero “by or around” 2050, with interim targets for 2030 and 2040. This transition falls within the typical lifetime of a ship, making the next two decades a critical window for investment and innovation. The real catalyst for change will be the recently agreed global carbon pricing mechanism, expected to significantly reshape investment decisions, operational strategies, and fuel choices across the industry.
Produced in partnership with New Energies Coalition, this report summarises the key outputs from a study that assesses the cost and implications of decarbonising shipping. It addresses three central questions:
- Nature of the transition What fuel-switching and technology measures will the shipping industry adopt, and what will be their associated costs?
- Economic impacts How will decarbonisation affect costs for shippers and the price of shipped goods across different cargo types and trade routes?
- Role of policy and finance How can industry, policymakers, and financiers work together to reduce costs and accelerate decarbonisation?
The study analysed the TCO (Total Costs of Ownership) for transporting a car and 20-foot container (as well as carried items: pair of shoes and car tyre) across three trade routes (intra-EU, Asia–EU, and US-EU), and evaluated different decarbonisation options, including alternative fuels, electric propulsion, wind-assistance and onboard carbon capture.
This study provides insights into the cost implications of maritime decarbonisation, the interaction between regulatory frameworks and financing mechanisms, and the potential pass-through effects on the prices of everyday goods.
What are the key findings?
Decarbonising shipping will inevitably come at a cost reflecting the current and near-term market and production realities of sustainable fuel alternatives and emission reduction technologies.
Bio-options (e.g. bio-LNG) might increase costs of deepsea vessels by 50%, and e-options (e.g. e-methanol / e-methane) can increase costs by 120%.
Therefore, meeting the IMO target will increase the average cost of shipping via a combination of carbon abatement options.
Carbon abatement costs for long-haul routes range between $200 and 700/tCO2e, leading to an increase in average shipping cost of ~20% in 2030 and ~50% in 2040.
However, decarbonising can cost less than doing nothing, as the penalties paid for continued use of fossil fuels under existing and emerging IMO and EU policies is expected to be significant.
Inaction could lead to a 120% increase in costs by 2040 for long-haul routes, compared to a 50% increase if proactive measures are taken.
Ultimately, the impact on shipping cost and goods prices will be small, as shipping costs represent a small fraction of total item prices, and decarbonisation affects only part of those costs (not e.g. terminal handling fees).
For the studied goods, the impact of decarbonisation on the price of an item is estimated to be less than 0.5%
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