Environmental Defense Fund (EDF) and Lloyd’s Register Maritime Decarbonisation Hub (Decarb Hub), a partnership between Lloyd’s Register Group and Lloyd’s Register Foundation, have today published Navigating the Net-Zero Transition – exploring innovative concepts to close the trillion-plus investment gap threatening the sector’s climate goals. The report, which builds on two years of research, presents insights across the maritime value chain leveraging over 40 interviews with shipowners, financiers, fuel developers, insurers, academics and NGOs, in response to warnings that shipping emissions could reach 130% of 2008 levels by 2050 without adequate funding.
“Without strong action, emissions from maritime shipping are projected to rise, putting the sector far off track to transition away from fossil fuels by 2050,” said Guillaume Morauw, Sustainable Finance Senior Policy Analyst at Environmental Defense Fund and co-author of the report.
Maritime shipping plays a unique role in the global economy, carrying nearly 80% of global trade and being the 6th largest emitter of greenhouse gas emissions globally, which makes the sector’s decarbonisation challenge especially acute. The sheer capital expenditure intensity of ships and fuel infrastructure creates major financing needs to achieve the sector’s transition away from fossil fuels. Recent progress to tackle harmful emissions, including the International Maritime Organization’s approval of a framework that would make maritime shipping the first sector to pay a price on emissions, risks stalling without sufficient support from public and private financiers.
“Additional, innovative mechanisms to de-risk projects and channel capital at scale are essential. By backing energy-saving retrofits, the lending platform helps shipowners cut emissions and mitigate transition risks, while giving financiers a practical way to make an impact and decarbonise their portfolios,” added Morauw.
Investors’ climate ambitions can often clash with shipping’s realities of high baseline emissions and limited zero-emission options. This disconnect is already evident: a survey from 2023 states that senior finance professionals contemplate divesting from maritime due to ESG risks, ultimately making affordable capital harder to secure especially for smaller shipowners.
Financiers remain cautious about one of the toughest industries to decarbonise, while scaling zero- and near-zero emission fuel projects demands huge capital expenditure, in some cases up to $2 billion for infrastructure, storage and terminal facilities.
“These challenges are evident in the lack of communication between shipping and infrastructure finance, despite their interdependence. To overcome this, fuel procurement strategies must evolve, and bold collaboration across the maritime value chain is critical,” said Dana Rodriguez, Programme Manager at The Decarb Hub and report co-author.
The report explores three concepts to help unlock investments by de-risking projects, broadening access to affordable capital and showing the wider benefits of decarbonisation:
- Maritime Multiplier: a carbon accounting tool that quantifies the supply-chain benefits of investing in cleaner ships. It shows how shipping decarbonisation can deliver “cascading” emissions reductions across multiple sectors and investor portfolios.
- Lending Platform for Energy Efficiency: a blended-finance platform pooling retrofit projects to lower risk, build market maturity and expand access to affordable capital in particular for smaller shipowners. It focuses on energy-saving technologies to cut emissions in the near term and reduce transition risks.
- Time Stacked Offtake (TSO): reshapes clean fuel contracts by breaking long-term offtake agreements into shorter, stackable tranches. This gives buyers more flexibility while providing fuel developers with revenue certainty. TSO could be managed by fuel producers, development banks or coalitions such as the Zero Emission Maritime Buyers Alliance (ZEMBA).
“Silos are holding back shipping’s transition. Finance and shipping must meet in the middle to deliver a sustainable and affordable transition,” added Rodriguez.
Next Phase: Collaboration and Pilot Projects
EDF and the Decarb Hub are now inviting feedback from stakeholders to help refine the concepts and move them toward commercial viability. They also invite partners – including banks, shipowners, fuel developers and public finance institutions – to take part in pilot projects that put these ideas into practice. The report’s findings will be shared at a closed meeting during London International Shipping Week on 15 September.
The report can be downloaded at: Navigating the Net-Zero Transition | The Decarb Hub.
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About Environmental Defense Fund’s Transport Team
EDF’s Transport team is working across modes to ensure that global transport is a thriving part of sustainable development and the global economy, delivering the goods and mobility people need to thrive without compromising clean air or climate stability. In shipping, EDF is committed to making the IMO’s measures a success to meet shipping’s interim and long-term targets, and to make the sector’s transition away from fossil fuels as efficient and fair as possible. We bring relevant scientific knowledge and research to the IMO and serve as a trusted partner and advisor to Member States and industry. We also work with industry partners to ensure their projects are scientifically sound and minimize the impacts of marine fuels on the climate, human health and the environment. For more information, please visit: https://www.edf.org/reducing-shippings-climate-impact.
About The Decarb Hub
The Lloyd’s Register Maritime Decarbonisation Hub (commonly known as The Decarb Hub) is an independent, non-profit initiative established through a partnership between Lloyd’s Register Foundation — a global charity with a mission to engineer a safer world — and Lloyd’s Register Group, a global provider of maritime professional services with over 260 years of heritage.
This partnership brings together the Foundation’s public benefit mandate and focus on societal resilience, with the Group’s deep technical expertise and trusted relationships across the maritime industry. Positioned at the intersection of these two organisations, the Hub is uniquely equipped to accelerate the safe, sustainable, and human-centric decarbonisation of global shipping — combining neutrality with influence, and research with real-world application. For more information, go to www.thedecarbhub.org.
About Lloyd’s Register
Lloyd’s Register (LR) is a global professional services group specialising in marine engineering and technology. Created more than 260 years ago as the world’s first marine classification society, to improve and set standards for the safety of ships.
Today we are a leading provider of classification and compliance services to the marine and offshore industries, helping our clients design, construct and operate their assets to accepted levels of safety and environmental compliance.
We also provide advice, support and solutions on fleet performance and optimisation, voyage optimisation, enhancing our clients’ digital capability. Our digital solutions are relied upon by more than 20,000 vessels. In the race to zero emissions, our research, technical expertise and industry-firsts are supporting a safe, sustainable maritime energy transition.
Lloyd’s Register Group is wholly owned by the Lloyd’s Register Foundation, a politically and financially independent global charity that promotes safety and education. For more information, go to www.lr.org.
About Lloyd’s Register Foundation
Lloyd’s Register Foundation is an independent global charity that supports research, innovation, and education to make the world a safer place. Its mission is to use the best evidence and insight to help the global community focus on tackling the world’s most pressing safety and risk challenges. For more information, please visit www.lrfoundation.org.uk