Charting a course towards green opportunities

International shipping faces a major transition to reduce greenhouse gas emissions and help meet the goals of the Paris Agreement. For many years, Norway's maritime industry has been at the forefront of developing solutions for this transition, supported by a strong domestic market. For example, a total of 58 battery-electric ferries were expected to be in operation during 2021, helping the technology to mature. A similar shift towards low- and zero-emission solutions is emerging in other shipping segments, and Norway's maritime industry is well positioned. However, technologies and value chains still require significant development.

In 2018, the International Maritime Organization (IMO) launched its strategy to reduce greenhouse gas emissions from international shipping. The strategy aims to reduce total annual greenhouse gas emissions by at least 50 per cent from 2008 levels by 2050. However, improvements in the fleet's energy efficiency have not kept pace with the growth in international trade since 2008. Projections now estimate that the industry's emissions in 2050 will be between 90 and 130 per cent of 2008 levels, depending on global economic growth (IMO Fourth Greenhouse Gas Study, 2020). Focusing solely on energy efficiency is unlikely to be enough to achieve the target of halving emissions. Much of the fleet will therefore need to transition to zero emissions.

As a result, the Norwegian Shipowners' Association launched a vision last year for its members to achieve climate neutrality by 2050, supported by specific interim targets. These include reducing greenhouse gas emissions per unit by 50 per cent by 2030 compared with 2008, and ensuring that members only order ships equipped with zero-emission technology from 2030. The vision has strong support among the association's members, with nine out of ten shipowners confirming that they expect to achieve the target of climate neutrality by 2050 (BDO AS/Norwegian Shipowners' Association).

The Norwegian Shipowners' Association's members operate ships across a range of segments, and mature zero-emission solutions are currently unavailable for most of them. There are no viable options for the ocean-going fleet in particular. Another key challenge is the global availability of green energy carriers, which this fleet will depend on as it operates worldwide.

There is therefore a significant gap between the ambitions and the options available to international shipping for reducing greenhouse gas emissions. This gap creates uncertainty in the industry, as operators cannot be sure which technologies and energy carriers will be relevant in the future. This uncertainty is compounded by the fact that ships ordered today will remain in service for the next 20–30 years and will therefore operate in a future market where zero emissions are the goal.

Following a period of very strong growth, global shipbuilding has been on a marked downward trend since 2010, with 2021 representing a provisional 20-year low. The figure below shows delivered gross tonnage. It indicates that fewer but larger ships have been delivered in recent years.
The reasons behind this development are complex, but it is reasonable to assume that the uncertainty shipowners face is a key factor. There is therefore good reason to believe that significant untapped potential exists for building ships with green solutions towards 2030.

The key to unlocking this potential lies largely in reducing uncertainty, scaling up technology and making green energy carriers available. It also requires solutions that enable vessels to be retrofitted as zero-emission technologies mature. Norway's maritime industry has been working on these challenges for many years, and Norwegian companies are leading several projects to develop and verify zero-emission solutions.

The transition to zero emissions is unlikely to be achieved through one specific technology or energy carrier. The solution will probably involve using technologies tailored to the needs of different vessel segments and operating areas. For example, fully battery-electric solutions are already well suited to vessels that travel short distances and operate where electricity is readily available. For ships with greater energy needs, solutions such as hydrogen and ammonia will be more suitable.

Over the past 50 years, the centre of global shipbuilding has shifted from Europe to Asia. More than 90 per cent of all ships are now built in Asia, and China has emerged as the world's leading shipbuilding nation. This makes it a key market for Norway's maritime industry as international shipping increasingly moves towards zero emissions.

The global market for green and zero-emission maritime solutions is substantial, and Norway's maritime industry is well positioned. This applies across the entire value chain, including shipowners, shipyards, suppliers and energy companies.

Maintaining this position is critical if we are to seize the commercial opportunities as this market matures.