The maritime industry, a vital component of global trade, is under immense pressure to decarbonize due to stringent environmental regulations and rising stakeholder expectations. With shipping accounting for nearly 3% of global greenhouse gas emissions, the industry must embrace innovative strategies, policy measures, and technological advancements to achieve net-zero emissions by 2050. However, the transition to a low-carbon maritime sector is not merely a technical or economic challenge – it also has significant legal and constitutional implications.

The decarbonization of the maritime industry not only transforms global trade but also raises fundamental questions about sovereignty and the legal framework governing the European Union (EU) and its Member States. The extension of the EU Emissions Trading System (ETS) to include maritime emissions exemplifies how supranational policies can impact national regulatory autonomy, compelling states to align with broader climate objectives. Additionally, the interplay between international maritime law, EU regulations, and national sovereignty highlights the evolving nature of constitutional principles, particularly in balancing environmental commitments with economic freedoms and state jurisdiction over territorial waters.

Against this backdrop, understanding the key drivers and enablers of maritime decarbonization becomes essential. The maritime industry plays a crucial role in global trade, yet it remains one of the most challenging sectors to decarbonize. Responsible for approximately 2-3% of global greenhouse gas (GHG) emissions, the industry faces increasing regulatory and societal pressures to transition to sustainable operations. The International Maritime Organization (IMO) and the European Union (EU) have set ambitious targets for reducing emissions, prompting the need for integrated policy frameworks, technological innovations, and financial incentives. Achieving decarbonization requires a structured strategy that aligns regulatory compliance with practical solutions.

One effective way to understand the complexities of maritime decarbonization is through the Decarbonization LED Model, which highlights three essential components: Levels, Ecosystem, and Drivers. These elements provide a roadmap to identifying sustainable solutions, enhancing collaboration, and leveraging financial and policy enablers.

The Decarbonization LED Model: A Structured Approach. Successfully transitioning the maritime industry towards sustainability requires addressing multiple factors simultaneously. The Decarbonization LED Model provides a comprehensive framework:

• Decarbonization Levels (solutions): This focuses on technological and operational improvements that reduce emissions, including the adoption of alternative fuels, vessel retrofitting, and fuel efficiency measures.
• Decarbonization Ecosystem (value chain): Stakeholders across the supply chain – shipbuilders, fuel suppliers, and operators – must collaborate to implement lifecycle assessments (LCA) that track emissions from production to end-of-life disposal.
• Decarbonization Drivers (enablers): Market forces, regulatory compliance, and financial incentives play a crucial role in determining the pace of transition. Investment in green technologies, carbon pricing, and stricter emission standards will shape the industry’s transformation.

The Regulatory Landscape: A Catalyst for Change. Government policies and international regulations are pivotal in steering the maritime industry toward decarbonization. Key initiatives shaping the future of green shipping include the International Maritime Organization’s (IMO) Revised Greenhouse Gas (GHG) Strategy, the European Union’s (EU) ‘Fit for 55’ Package, energy efficiency standards, and national policies and incentives.

1. IMO’s Revised GHG Strategy. In July 2023, the IMO adopted an enhanced GHG reduction strategy, setting ambitious targets to mitigate emissions from international shipping. IMO’s strategy outlines a clear trajectory with indicative checkpoints:

• By 2030: A reduction of total annual GHG emissions from international shipping by at least 20%, striving for 30%, compared to 2008 levels.
• By 2040: A reduction of total annual GHG emissions by at least 70%, striving for 80%, compared to 2008 levels.
• By 2050: Achieving net-zero GHG emissions, effectively phasing out fossil fuels in maritime operations.

Additionally, the strategy emphasizes the uptake of zero or near-zero GHG emission technologies, aiming for these to represent at least 5%, striving for 10%, of the energy used by international shipping by 2030.

In addition, to reach these goals, the IMO has implemented specific measures to enhance the Energy Efficiency of Ships:

• Energy Efficiency Design Index (EEDI). The EEDI sets minimum energy efficiency requirements for new ships, promoting the use of energy-efficient technologies. Enforced since 2013, it is tightened every five years to encourage continuous innovation. Shipbuilders have flexibility in choosing technologies such as hull air lubrication, wind-assisted propulsion, and waste heat recovery. By 2025, the required EEDI reduction level will be 30% lower than the baseline for ships built between 2000 and 2010.
• Ship Energy Efficiency Management Plan (SEEMP). The SEEMP is an operational strategy that helps shipowners and operators enhance vessel efficiency through a structured approach. It consists of:

1. Part I: A ship-specific energy efficiency improvement plan.
2. Part II: A data collection system for fuel oil consumption.
3. Part III: A carbon intensity plan aligned with IMO’s reduction targets.

Since 2016, fuel oil consumption data collection has been mandatory under the IMO’s Data Collection System (DCS) to guide future efficiency improvements.

• Energy Efficiency Existing Ship Index (EEXI). Implemented in 2023, the EEXI applies to existing ships over 400 gross tonnage (GT), assessing their design efficiency against the 2022 EEDI standards. Shipowners can comply by adopting measures such as engine power limitation, waste heat recovery, and wind-assisted propulsion.
• Carbon Intensity Indicator (CII) The CII evaluates the operational energy efficiency of ships over 5,000 GT, assigning an annual rating from A (best) to E (worst). Ships rated D for three consecutive years or rated E must implement corrective actions. This system incentivizes continuous improvement and encourages the adoption of energy-efficient operations and low-carbon fuels.

Together, the IMO’s EEDI, SEEMP, EEXI, and CII create a comprehensive regulatory framework aimed at reducing shipping’s carbon footprint while fostering investment in sustainable technologies.

2. EU’s ‘Fit for 55’ Package. The EU’s ‘Fit for 55’ Package is a comprehensive set of legislative proposals aimed at reducing net GHG emissions by at least 55% by 2030, compared to 1990 levels. Within this framework, the FuelEU Maritime initiative seeks to limit the carbon intensity of energy used on board ships, promoting the adoption of sustainable maritime fuels. This regulation mandates a gradual reduction in the carbon intensity of maritime fuels, encouraging the use of renewable and low-carbon energy sources.

Furthermore, the EU has extended its Emissions Trading System (ETS) to include maritime emissions. As of January 2024, emissions from large ships (over 5,000 gross tonnage) arriving at or departing from EU ports are subject to the ETS, requiring ship operators to purchase allowances corresponding to their emissions. This market-based approach incentivizes the reduction of GHG emissions through economic mechanisms.

3. National Policies and Incentives. Individual countries are also contributing to maritime decarbonization through targeted policies and incentives. For instance, Norway has been a pioneer in promoting zero-emission vessels by offering subsidies and financial support for the development and deployment of electric and hybrid ships. The Norwegian government’s initiatives have led to the successful operation of fully electric ferries, such as the Ampere, significantly reducing emissions in domestic maritime transport. Similarly, the Netherlands has implemented programs to encourage sustainable shipping practices, including grants for research into alternative fuels and the development of green port infrastructure. These national efforts complement international regulations, accelerating the transition to a decarbonized maritime industry.

Collectively, these policies and regulations form a comprehensive framework that drives the maritime sector toward a sustainable and low-carbon future.

Key Challenges and Opportunities. Despite clear regulatory goals, the path to decarbonization is fraught with challenges. However, these challenges also present opportunities for innovation and industry transformation.

1. Future Fuels and Technological Advancements. While alternative fuels like hydrogen, ammonia, and biofuels are seen as critical to reducing emissions, their large-scale adoption faces infrastructure, cost, and supply chain hurdles. To overcome these barriers, investments in carbon capture and storage (CCS), wind-assisted propulsion, and battery-electric hybrid vessels are gaining traction, creating viable pathways for long-term sustainability.
2. Financial Considerations and Market Incentives. The financial implications of decarbonization are substantial. According to Climate Policy Initiative (CPI), approximately USD 266 trillion in climate financing is required by 2050 to prevent economic and social losses estimated at USD 1,266 trillion under a business-as-usual (BAU) scenario by the end of the century. In the maritime sector, transitioning to a decarbonized fleet by 2050 is projected to cost between $8 billion and $28 billion annually. Additionally, according to UNCTAD’s report, establishing the necessary carbon-neutral fuel infrastructure could demand yearly investments ranging from $28 billion to $90 billion. Market-based mechanisms such as carbon pricing, the Poseidon Principles, and ESG financing are becoming essential in securing investment. Green bonds and government subsidies, such as those from the European Investment Bank (EIB), serve as crucial financial instruments in closing funding gaps for sustainable shipping initiatives.
3. Enhancing Operational Efficiency Through Digitalization. Optimizing vessel operations can lead to substantial emission reductions. The adoption of AI-driven predictive maintenance, digital twin technology, and blockchain-based emissions tracking is revolutionizing maritime logistics. Strategies like slow steaming, real-time route optimization, and smart fuel management contribute to reducing fuel consumption and lowering operational costs.
4. Policy Coordination and Global Collaboration. As shipping is inherently international, aligning global policies is critical for a smooth transition. The Getting to Zero Coalition and Clean Energy Marine Hubs facilitate collaboration among governments, financial institutions, and private stakeholders, ensuring that decarbonization policies are in sync with technological advancements and economic feasibility.
5. Addressing the Disparity in Developing Nations and Small Shipping Firms. Smaller shipping companies and developing nations often struggle with the financial and logistical challenges of meeting stringent decarbonization regulations. To create an equitable transition, international financial institutions must step in with targeted funding, capacity-building initiatives, and phased compliance requirements that provide flexibility and support for stakeholders with limited resources.

Case Studies: Leading the Way in Green Shipping. The maritime industry’s shift toward decarbonization is exemplified by several pioneering initiatives that integrate innovative technologies and sustainable practices.

Maersk is pioneering the use of green methanol-powered vessels, with Ane Mærsk being the first of its 18 large methanol-enabled ships delivered between 2024 and 2025. Equipped with a state-of-the-art dual-fuel engine capable of running on green methanol, “Ane Mærsk” entered service on the Asia-Europe trade lane in February 2024, marking a significant milestone in low-emissions shipping (Maersk, 2024).

In Norway, the Green Shipping Program has been instrumental in promoting sustainable maritime solutions. A notable success is the Ampere, a fully electric ferry that has been operating since 2015. The Ampere utilizes battery technology to eliminate emissions during operation, setting a precedent for future electric vessels.

Cargill is advancing decarbonization through the deployment of wind-assisted propulsion systems. The company has retrofitted Mitsubishi Corporation’s Pyxis Ocean vessel, chartered by Cargill. Is the first vessel to be retrofitted with two WindWings, – large, rigid sails designed to harness wind energy – resulting in significant fuel savings and emission reductions. Cargill is also investing in biofuels and methanol-powered ships, with plans to operate dual-fuel methanol vessels within the next two years.

These case studies highlight that strategic investments, policy support, and cross-sector collaboration can significantly accelerate the maritime industry’s transition to net-zero emissions.

Conclusion. The journey toward maritime decarbonization is challenging but achievable. The Decarbonization LED Model offers a structured approach to integrating policy measures, financial strategies, and technological advancements into an effective transition plan. By fostering global collaboration, securing investment in clean technologies, and ensuring regulatory compliance, the maritime sector can move toward a more sustainable and resilient future. The key to success lies in the collective efforts of regulators, industry leaders, and financial institutions to drive innovation and maintain economic viability while meeting climate targets. With continued regulatory backing and industry-wide commitment, the shipping industry can not only reduce its environmental footprint but also emerge as a global leader in sustainable transportation.

Viktoriia Koilo is an Associate Professor and Program Coordinator for the Bachelor of Science in Shipping Management at the Norwegian University of Science and Technology (NTNU), within the Department of Ocean Operations and Civil Engineering. She earned her Ph.D. in Economics and currently, Viktoriia’s research interests encompass a range of topics, including business model innovation, economic growth, maritime decarbonization, supply chain management, sustainable development, and transport logistics. Her works emphasize the importance of technological innovation, policy development, and collaborative strategies to achieve decarbonization and promote sustainable growth within the sector.