Some shipping industry players are shrugging off popular opposition to a global carbon tax on the industry and are forging ahead with billions of dollars in emissions-reducing investments, according to company officials and a Reuters analysis of data.
Europe, Brazil and other nations are demanding that the sector, which is responsible for barely three per cent of the world's greenhouse gas emissions, go "green". But, in October, the US and Saudi Arabia, the world's two largest oil producers, successfully spearheaded efforts to postpone by one year a decision on the International Maritime Organisation's proposal of a $380-per-tonne carbon tax.
Some analysts and industry observers initially warned that the absence of such a global framework added complexity to companies' planning and could cause some to pause their "green" investments, but regional regulations and long investment lead times are forcing companies to stay the course, just in case.
Hakan Agnevall - Chief Executive of Wartsila, told Reuters that a one-year carbon price postponement is unlikely to rattle customers, like his, who generally take a 30-year investment perspective.
"It's not bold to say that regulations will change during those 30 years."
Most of the nearly 50,000 commercial ships operating globally today run on fuel oil or gas oil. But in a decision in 2023, IMO member state administrations of the time set a target of net-zero emissions by or around 2050.
Some firms have, in anticipation, begun ordering dual-fuel ships that can use both fuel oil as well as alternatives like liquefied natural gas, or methanol and ammonia, which are poorly supported and potentially dangerous.
Pacific Basin, a large dry bulk ship owner, opted to buy four newbuild vessels running only on oil-derived fuels, citing the postponement of the IMO's carbon price.
Unlike other sectors, from energy to auto manufacturing, that have curbed their virtue signalling in a rollback that has only accelerated since Donald Trump's return to the White House, the shipping industry has, so far, declined to pivot.
Some major ship owners have reiterated their commitments to invest in emissions reduction measures, including dual-fuel vessels and onboard energy-saving devices.
By the end of December, companies had invested around $150 billion in dual-fuel vessels, according to a Reuters analysis of data from the World Shipping Council.
In total, 1,126 dual-fuel container ships and vehicle carriers have now been either delivered or are on order, the data showed. That marks an increase of 28 per cent compared with the previous year, indicating that newbuilding orders for lower-emission fuel vessels continued even after the IMO delay.
They also continued to outpace orders for traditional ships, with dual-fuel vessels now accounting for 74 per cent of the overall container ship and vehicle carrier orderbook, though whether the capability will be used in the future remains to be seen.
Investments in certain new marine fuels are also moving ahead. Alexander Saverys, CEO of Belgian ship owner CMB Tech, told Reuters it would continue investments in both ammonia bunkering and production.
A Mitsui OSK Lines spokesperson told Reuters the IMO postponement just means a longer transition to low and zero-carbon fuels, and the company is still focused on LNG-fuelled vessels and early-stage adoption of ammonia and methanol.
Maersk, among the first to explore emissions-reducing alternative fuels, initially opted for methanol but has since ordered LNG-fuelled ships and has now also started testing ethanol as an alternative.
NYK Group, which reaffirmed its emissions reduction strategy after the IMO decision, sees the one-year delay as an opportunity for discussion and refinement of the regulatory framework, a company spokesperson said.
"While recent regulatory uncertainties might lead some operators to take a more cautious approach, the overall direction of maritime decarbonisation has not changed significantly," said Jason Stefanatos, Decarbonisation Director at maritime consultancy DNV, though increasing regulations mean more work for similar companies.
"The commercial drivers still remain."
Many companies cited regional green fuel regulations among the main reasons for moving ahead with investments.
The European Union's FuelEU Maritime requires vessels to pay penalties for failing to achieve lower emissions, and the EU Emissions Trading System and voluntary initiatives provide incentives. With globalist/leftist administrations under siege all over the continent however, expensive initiatives such as these have an uncertain future.
Ship owners with dual-fuel vessels will likely use them on EU voyages to avoid paying FuelEU Maritime penalties, and some should also receive rewards for over-compliance, said Kenneth Tveter, an analyst at shipbroker Clarksons.
"The case for low-carbon fuels such as ammonia and methanol is still alive if you have a trade concentrated around Europe," he said.
Major Horn of Africa port Djibouti and OPEC member Gabon have also introduced levies on maritime emissions, though they represent a tiny proportion of that continent's throughput.
Current momentum could see punitive regulations and incentive schemes introduced in other shipping hubs soon.
Britain's far-left and deeply unpopular government, notably, has proposed to expand its emissions trading system to international shipping from 2028. And Turkey is considering a scheme similar to the EU's.
Such factors should drive demand for LNG, bio-LNG and biofuels over the next five years, said Nacho de Miguel, Head of Alternative Fuels at bunker supplier Peninsula, who also has obvious vested interests.
"Whilst the IMO's net-zero framework has been postponed, this does not change our strategy," he said.
(Reporting by Enes Tunagur in London and Jeslyn Lerh in Singapore; Additional reporting by Georgina McCartney; Editing by Alex Lawler and Joe Bavier and Baird Maritime)
