Shipping is the backbone of the global economy, carrying more than 80% of traded goods. But it also accounts for about 3% of man-made carbon dioxide emissions, with the overwhelming majority of the world’s fleet running on fossil fuel. If the sector is to decarbonize in line with the 2015 Paris agreement on climate change, it needs to move beyond oil.

1. Which fuels could replace oil?

The ship fuels that may eventually replace today’s oil-derived products must produce lower (or zero) emissions, have enough power to propel gigantic vessels around the globe, and be affordable. Here are the main candidates:

• Methanol

Pros:

Can dramatically reduce emissions

Has already attracted significant investment from shipping companies including A.P. Moller-Maersk

Is liquid at ambient temperature, helping make it relatively easy to store and handle

Clean versions can be made, including using agricultural and food waste (bio methanol) or green hydrogen and CO2 (e-methanol)

Cons:

Limited supply of clean versions

Less energy-dense than oil-derived fuel

• Ammonia

Pros:

Doesn’t emit carbon dioxide – it contains no carbon

Can be made using green hydrogen and nitrogen from the air (e-ammonia)

Can also be made using natural gas (blue ammonia)

Cons:

Ammonia ship engines are less developed than those for methanol

Potential nitrous oxide emissions, a potent greenhouse gas

Toxic for people and marine life

• Biofuels

Pros:

Can significantly lower carbon emissions

Already produced and used in shipping

Can be made from various forms of biomass

Relatively easy to store and transport

Can be used with existing oil-based fuel

Cons:

Feedstock availability is a potential barrier, particularly because of competition from other sectors, like aviation

• Liquefied Natural Gas

Pros:

Well-known, generally available, lower carbon-emitting alternative to oil-based fuel

Some ships already run on LNG

There’s also the potential for lower CO2 emissions from so-called bio-LNG and e-LNG

Cons:

Still a fossil fuel and only cuts CO2 emissions by about 20% versus oil-based marine fuel

Causes emissions of methane, a super-pollutant

2. What about electricity and other clean options?

Batteries lack the energy density to power massive, globe-trotting ships on long voyages. For example, a typical container ship would need the power of 10,000 Tesla S85 batteries every day. Electricity does have a role, though probably for relatively short-haul trades or powering passenger ferries. Shippers are also turning back to the wind: commodity titan Cargill plans to add so-called wing sails to some cargo vessels and another firm is working on using a giant kite to lower fuel consumption. Hydrogen fuel cells – and even nuclear power – are also options. There’s also the possibility of fitting ships with carbon capture technology. One such system was recently installed on an Eastern Pacific Shipping tanker.

3. Why the urgency?

The International Maritime Organization, a U.N. agency that regulates global shipping, is currently pushing to cut greenhouse gas emissions from international shipping by at least 50% by 2050. That’s not enough of a reduction to align the industry with the Paris agreement’s goal of limiting global warming to 1.5 degrees Celsius. For that, the IMO must target eliminating all GHG emissions, reaching net zero by 2050, according to the Maersk Mc-Kinney Moller Center for Zero Carbon Shipping. The IMO’s current targets aren’t enforceable in themselves, unless a country puts something in its national legislation.

While international shipping isn’t mentioned in the Paris agreement, the Maersk Mc-Kinney Moller Center has produced a trajectory that’s aligned with the treaty by applying the IPCC’s global emissions pathways – for limiting global warming to 1.5 degrees Celsius above preindustrial levels – to shipping. A legal briefing, commissioned by Transport & Environment, a nongovernmental organization, concludes that the Paris agreement “imposes legal obligations on Parties to include international aviation and shipping emissions in their Nationally Determined Contributions.”

4. What are the latest developments?

The IMO is meeting in early July and is expected to adopt a new greenhouse-gas emissions strategy, potentially including more aggressive targets such as zero by 2050. However, no firm decisions are expected on a global carbon levy or similar hard-hitting regulation that would immediately and directly impact shippers’ activities. The IMO has also recently set rules on ships’ efficiency. Other regulators have also taken action: The European Union is including shipping in its emissions trading scheme starting next year, and the FuelEU Maritime agreement – requiring emissions reductions relative to energy use – has also been reached. In the U.S., the Inflation Reduction Act includes $3 billion of maritime-related funding, including for zero-emission port equipment, and progress is being made on Green Shipping Corridors – zero emission maritime routes between two or more ports.

5. What’s the industry doing?

Last year, for the first time, the majority of gross tonnage ordered was capable of running on alternative fuel – including liquefied natural gas – according to Clarksons. Maersk has ordered 25 ships that are capable of running on methanol, with the first making its maiden voyage this year, and it’s not alone. Commodities giant Trafigura Group has issued a white paper, supporting a mandatory carbon levy by 2025 “to address the price gap that exists between the fuels currently used to power ships and hydrogen-derived alternatives.” The Global Maritime Forum, a not-for-profit, has multiple initiatives involving large companies, including the Poseidon Principles and Sea Cargo Charter.