International Shipping

The IMO adopted inadequate 2030 and 2050 emissions targets in 2018. Governments are expected to adopt revised targets at an upcoming meeting in July 2023. Some of the options on the table for 2050 are likely 1.5°C compatible in our view, but the 2030 targets under consideration need to be strengthened further. Beyond stronger targets, governments need to substantially ramp up climate action, as emissions under current policies are not on track to meet the existing, inadequate, targets.

Quantifying the IMO’s existing targets is challenging as several methodological decisions remain outstanding (see discussion below). The choice of a 2008 baseline has the effect of making the existing targets appear more ambitious than they actually are. In that year, average ship speed and corresponding emissions were at an all-time high (ships are less efficient at faster speeds). In response to falling demand following the 2008 financial crisis, carriers reduced supply capacity by scrapping older vessels, cancelling orders for new ships and lowering ship speeds, to avoid freights rates reduction; all measures which drove emissions reductions before IMO set its targets (Spero & Raval, 2019).

Beyond its 2030 and 2050 targets, the IMO’s 2018 Initial Strategy also contains an objective of peaking and then declining GHG emissions as soon as possible and a goal of phasing out emissions post-2050 (IMO, 2018). However, beyond a brief drop in 2020 due to the pandemic and a general plateauing of emissions during much of the coming decade, we see no evidence of a peak in sight, nor an eventual phase-out, as emissions are projected to continue growing to 2050.

The IMO has set a 2030 carbon intensity target of at least 40% below 2008 levels by 2030, but it has still not agreed on how to define ‘carbon intensity’ in terms of transport work, despite having this on its agenda since mid-2021, which makes quantifying the target challenging.

There are two options – to define transport work based on supply (Annual Efficiency Ratio – AER)^[1] or demand (Energy Efficiency Operational Indicator – EEOI)^[2]. Analysis suggests that the supply-based (i.e. AER) approach would be more stringent (lead to fewer emissions in 2030) (ICCT, 2021). It is also more compatible with the IMO's current reporting structure: it would take years to develop and implement something capable of producing the necessary data for a demand side (EEOI) approach (ICCT, 2021). The supply side (AER) approach is widely used for most fleet calculations, while the EEOI is still voluntary.

The IMO’s adoption of a 2% yearly carbon intensity reduction between 2019 - 2039, is aligned with the supply based (AER) approach, yet an explicit decision on this definitional issue remains outstanding and will unlikely be addressed until the next IMO GHG Study. Regardless of the method adopted, quantifying an absolute target level is highly depending on assumptions made about future demand in the sector more broadly.

In 2020, the IMO released its latest GHG inventory (the "Fourth GHG Study"). It presented two methodological approaches for reporting historical emissions – one based on the type of vessel and the other on the voyage of the ship. Historically, it used the vessel-based approach, but there is concern that this overestimates international shipping emissions. The voyage-based approach is more in line with IPCC guidelines. It is unclear which method it would use to assess compliance with its targets.

The target covers CO₂ emissions only: as we discuss elsewhere in this assessment, methane emissions are now on the rise in the shipping sector as the use of LNG expands.

We quantify the 2030 target as 583-603 MtCO₂ for only CO₂ emissions, based on the AER and voyage-based approaches. We adopted the voyage-based approach to ensure consistency with our country analysis, which is based on GHG emissions reporting using IPCC guidelines. For more detail on our methods, see the Assumptions tab.

We rate the 2030 carbon intensity target as “Insufficient’, indicating that the target is consistent with limiting warming to between 2°C and 3°C for 2030, if all other sectors were to follow the same approach as international shipping.

The shipping sector is not on track to meet this target. We calculate that under current policies, (750-776 MtCO₂ in 2030) emissions will be about 30% above the emission levels (583-603 MtCO₂) the carbon intensity reduction target is set to achieve in 2030.

The IMO adopted its 2030 target in 2018 as part of its Initial GHG Strategy (IMO, 2018). At the time, governments considered, but could not agree on, setting an absolute emissions target. An absolute target would provide much greater clarity and certainty on the actual emissions reductions to be achieved and the level of ambition of the sector more broadly. Proposals to adopt an absolute (and stronger) target are on the table for the upcoming IMO meeting in July 2023 (see below for further details.)

[1] The amount of CO₂ per capacity of carriage (deadweight) per nautical mile (gCO₂/dwt-nm).
[2] The amount of CO₂ emitted per each tonne of goods per nautical mile (gCO₂/t-nm).

The IMO has two 2050 targets: a carbon intensity target of 70% below 2008 levels by 2050 (covering CO₂ emissions only) and an absolute emissions reduction target of 50% below 2008 (covering all GHG emissions).

Quantifying the 2050 carbon intensity target is challenging for the same reasons as discussed above regarding the 2030 target. We calculate that this corresponds to a CO₂ emissions level of 367-410 MtCO₂ in 2050 compared to 2008, using the AER and voyage-based approaches. Our current policy projection (832-930 MtCO₂) estimates that emissions will be more than double that level in 2050.

The 2050 GHG emissions reduction target equates to about 398 MtCO₂e in 2050 for all gases. For CO₂ emissions only, the level would be 388 MtCO₂.

The carbon intensity target is ‘Highly insufficient’ (the CAT always considers the top end of a range) and the absolute GHG reduction target (taking the CO2 emissions value only) is ‘Insufficient’.

The sector is far off track from meeting either of these inadequate targets.

Note: Our graphs display the CO₂ amounts only, as our rating system is based on CO₂ emissions only.

The IMO will consider the revised targets at the upcoming meeting of its Marine Environment Protection Committee (MEPC) meeting on 3-7 July 2023. These targets would then be forwarded to the IMO Council meeting on 17-21 July 2023 for formal adoption. Following adoption, a resolution will then need to be accepted by contracting party governments within an agreed fixed period – after which the resolution enters into force.

There are a range of proposals on the table for both the 2030 and 2050 targets as well as the introduction of 2040 targets.

2030 targets
For 2030, some have proposed shifting to a stronger, absolute target, covering all GHGs, of 37% below 2008 levels. This target equates to an absolute emissions level of 501 MtCO₂e for all GHGs or 489MtCO₂ for CO₂ only (assuming a uniform reduction level across all gases and a voyage-based approach).

To reach 1.5°C compatibility, emission reductions of CO₂ would need to be at least 47% below 2008 levels (our methods do not cover all GHG emissions).

Other governments support no change in the 2030 target: an untenable position given the inadequacy of current ambition.

2040 targets
Absolute emission reduction targets of 50% to 96% below 2008 levels for all GHG emissions have been proposed for 2040.

We estimate that these targets equate to about 398 MtCO₂e (50%) and 32 MtCO₂e (96%) for all GHG emissions, using the voyage-based approach. Assuming comparable cuts for CO₂ emissions only, results in a CO₂ emissions level of 388 MtCO₂ (50%) and 31 MtCO₂ (96%). A 50% CO₂ reduction falls just inside our ‘Insufficient’ range. The 96% reduction is consistent with our 1.5°C compatible rating.

Some governments have suggested delaying any decision on 2040 targets to future sessions. However, the technology to decarbonise the sector already exists, and it needs strong, clear policy guidance to support action: the world cannot afford to delay action any longer.

2050 targets
Options on the table for 2050 targets range from zero GHG emissions in 2050 to net zero in the second half of the century.

Zero emissions in 2050 is the most ambitious and is consistent with a 1.5°C pathway, provided that emissions are cut at a suitable pace up to this point.

A 2050 net zero emissions target includes some amount of residual emissions from the sector in 2050 (a number above zero), which would need to be offset by action taken elsewhere, such as through the use of bio-energy and carbon capture and storage (BECCS). However, the reliance on BECCS should be avoided as much as possible for the shipping sector, as shipping has scalable zero emission options available and the limited capacity of BECCS would be better deployed in other hard-to-abate sectors with no alternatives. The compatibility of this target is difficult to assess, as it depends on the level of residual emissions from international shipping in 2050.

Likewise, any proposal to push the date at which net zero emissions are achieved into the future, further weakens the level of ambition of the target. This last version is favoured by countries including China, Brazil, Saudi Arabia, UAE, India, South Africa, among others (Angola et al., 2023).

Target emissions coverage scope
Existing targets only consider emissions based on a ‘Tank-to-Wake’ approach (meaning only those emissions associated with the downstream combustion of fossil fuels to power the ship). The alternative under discussion would be to expand the scope to lifecycle GHG emission (Well-to-Wake). In other words, to also include emissions associated with the upstream production of fossil fuels (the ‘well’ portion) and not just combustion. The estimates also do not include methane emissions from LNG transports. These are quite substantial, as some of the LNG evaporates and is vented during the voyage.

To keep the Paris Agreement temperature goal within reach, it is imperative that governments take responsibility for emissions from international shipping by elevating ambition at the IMO to achieve global consensus on emission reduction regulations.

Governments need to complement these efforts domestically, to actively work to bring their domestic - and indirectly international - shipping emissions to zero. Currently, only one of the 40 countries plus the EU that the CAT analyses explicitly includes international emissions in its national net zero target.

Domestic action is important where first-movers, such as the EU, can create the enabling conditions (such as public and private finance, R&D, fuel production etc) that will have positive spillover implications for international shipping and third countries – but domestic policies would need to be designed appropriately to also consider an equitable transition.

A key point here is that domestic action is required – especially for first movers to pave the way for advancing the development of new technological solutions – but should not jeopardise action at global level through the IMO by risking creating a patchwork of incompatible regional regulatory mechanisms. This limits the full scope of addressing 100% of international shipping emissions and risks leaving vulnerable countries (including SIDS and LDCs) out of the decarbonisation discussion and access to finance.

For countries that the CAT analyses, we track whether international shipping has been included in their net zero targets. This information is available on individual country pages.