International Shipping

In 2023, at its MEPC80 meeting, the IMO adopted its Revised GHG Reduction Strategy, setting stronger emissions reductions targets (IMO, 2023b). However, the agreement failed to set firm near- and medium-term targets compatible with limiting global temperature rise to 1.5°C. As part of a net zero target pathway, governments agreed only to “indicative checkpoints” for 2030 and 2040. The 2030 checkpoint is not 1.5°C compatible and the net zero target is not quantifiable. Only the most ambitious end of the 2040 checkpoint falls within a 1.5°C compatible range.

The 2030 checkpoint of at least 20% below 2008 levels (all GHGs), “striving for 30%”, is much lower than the most ambitious target proposed during earlier negotiations (ISWG-GHG 14). Similarly, the 2040 checkpoint of at least 70% below 2008 (all GHGs), “striving for 80%”, is also not as ambitious as other proposals. Governments did agree to a net zero target, an improvement compared to the previous 50% target, but the loose timeframe of “by or around” 2050 and the lack of clarity on residual emissions makes the target difficult to assess.

The IMO’s 2023 Revised GHG Reduction Strategy replaced the 2018 GHG Strategy but reaffirms the objective of peaking and then reducing GHG emissions as soon as possible (IMO, 2023b). There is currently no evidence that emissions from the shipping sector will peak. Instead, emissions are projected to continue growing to 2050.

Quantifying the IMO’s carbon intensity target is challenging because several methodological decisions remain outstanding (see the 2030 targets section below). By choosing a 2008 baseline, existing targets appear more ambitious than they are. In 2008, 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 a reduction in freight rates; factors which drove emissions reductions before the IMO set its targets Click or tap here to enter text.(Spero & Raval, 2019).

The IMO’s 2023 Revised GHG Reduction Strategy contains two 2030 targets. The strategy retained the carbon intensity reduction target of 40% from the 2018 GHG Reduction Strategy, and introduced a new indicative checkpoint of at least 20%, striving for 30% emissions reductions below 2008 levels, as part of a pathway to net zero. The carbon intensity target and the checkpoints, which are absolute emission reduction targets, are separate from one another.

2030 carbon intensity target

The IMO has set a 2030 carbon intensity target of at least 40% below 2008 levels by 2030. However, the IMO has still not agreed on its definition for ‘carbon intensity’ despite having this on its agenda since mid-2021. The unclear definition makes quantifying the target challenging. It is not explicitly connected to the more recent 2030 indicative checkpoints but rather was retained to complement the newer checkpoints.

Methodology

There are two ways to define the carbon intensity of shipping: based on either supply (the Annual Efficiency Ratio or AER)¹ or demand (the Energy Efficiency Operational Indicator or EEOI)². Analysis suggests that the supply-based (AER) approach would be more stringent and lead to fewer emissions in 2030 (ICCT, 2021). The AER method is also more compatible with the IMO's current reporting structure; it would take years to develop and implement a system for producing the necessary data for a demand side approach, such as the EEOI method (ICCT, 2021). The AER approach is widely used for most fleet calculations, while the EEOI is still voluntary.

The IMO’s adoption of a 2% annual carbon intensity reduction target between 2019 and 2039 is aligned with the supply-based (AER) approach. However, a decision on this definitional issue remains outstanding and is unlikely to be addressed until the IMO’s next GHG Study. Regardless of the method adopted, quantifying emissions levels is highly dependent on assumptions made about future demand in the sector.

In 2020, the IMO released the Fourth GHG Study, its latest GHG inventory. Two methodological approaches are presented for reporting historical emissions: one based on the type of vessel and the other on the type of voyage. Historically, the IMO used the vessel-based approach. However, there are concerns that this approach overestimates emissions. The voyage-based approach is more aligned with IPCC guidelines. It is unclear which method the IMO will use to assess compliance with its targets.

Fossil gas coverage

The 2030 carbon intensity target only covers CO₂ emissions and excludes methane emissions. The exclusion of methane emissions is problematic because a shift to LNG means they are increasing in the shipping sector. The Fourth GHG Study estimated methane contributed to 3% of emissions from international shipping, but between 2012 and 2018, the expansion of LNG vessels in fleets has led to emissions rising by 150% (IMO, 2020).

Quantification

We used 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 estimate that the carbon intensity target equates to a 2030 carbon emissions level of 876 MtCO₂, or a 13% increase from 2008 levels. This makes the carbon intensity target ineffective and obsolete. Since they are not implicitly connected to the 2030 checkpoint targets, we assume the newer 2030 checkpoints as the target that takes precedent.

2030 ‘Indicative Checkpoint’

The IMO established “indicative checkpoints” for 2030 and 2040 as part of its net zero commitment. For 2030, it set an emissions reductions goal of at least 20% below 2008 levels for all greenhouse gases but will “strive for” a 30% reduction.

We estimated this goal equates to GHG falling to about 637 MtCO₂e for the 20% reduction level and 557 MtCO₂e for the 30% target for all GHG emissions, using the voyage-based approach on a Tank-to-Wake basis. Applying the same reduction levels to CO₂ emissions only, we quantify the new 2030 emissions reduction goals to result in 543-621 MtCO₂.

2030 Rating

The CAT rates the 2030 indicative checkpoint 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 20% indicative checkpoint results in carbon emissions falling to 621 MtCO₂ in 2030, while the 30% indicative checkpoint will drive further emission cuts to 543 MtCO₂. CAT ratings are based on the top end of a target range and, therefore, are based on the 20% checkpoint. The 30% reduction falls in the “Almost sufficient” rating range.

To reach 1.5°C compatibility, international shipping would need to reduce its CO₂ emissions by at least 47% below 2008 levels by 2030. This is equivalent to carbons emission falling to 410 MtCO₂ by 2030.

The shipping sector is still off track to meet the IMO’s 2030 targets. Current policies are projected to be well above the 20% and 30% 2030 ‘indicative checkpoints’ but well below the 40% carbon intensity reduction target.

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 adopted an “indicative checkpoint” goal of reducing GHG emissions by at least 70% by 2040 compared to 2008 levels and “striving for 80%”. We estimate that these targets equate to about 239 MtCO₂e (70%) and 159 MtCO₂e (80%) for all GHG emissions, using the voyage-based approach. Assuming comparable cuts for CO₂ emissions only, it results in a CO₂ emissions level of 233 MtCO₂ (70%) and 155 MtCO₂ (80%). A 70% reduction in CO₂ is “Almost Sufficient,” while the 80% reduction is consistent with our 1.5°C compatible range.

Several options were proposed at MEPC80, ranging from further delaying target setting for 2040 to emissions reductions targets between 50% and 96% below 2008 levels for all GHG emissions. An emissions reductions target of 96% would have been well within our 1.5°C range.

The IMO’s revised strategy now has a single long-term target: net zero GHG emissions “by or around, i.e. close to 2050”.

We could not quantify the net zero GHG target due to limited information from the IMO on the level of residual emissions by or beyond 2050. Any residual emissions from international shipping would need to be counterbalanced by carbon dioxide removals (CDR). Quantification of the target is also hindered by the target’s imprecise deadline of reaching net zero “by or around” 2050.

The sector is far off track anything that resembles zero emissions in 2050. Current policy projections estimate that emissions will increase by 4-19% by 2050 compared to 2008 levels. If the Net Zero Framework (NZF) were adopted, emissions would have fallen to at least 86% below 2008 levels. The NZF would have provided the regulatory certainty that specific zero-emission fuels would be adopted by the shipping industry. Without the NZF, conventional fossil oil may remain in the global fleet for longer, while companies may continue investing in LNG powered vessels, which will continue emitting beyond 2050.

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

Following the MEPC80 in 2023, the emissions coverage of targets and measures was expanded to cover life cycle emissions in line with the “Well-to-Wake" approach in the adopted Guidelines on Life Cycle GHG Intensity of Marine Fuels (Resolution MEPC.376(80)). The Well-to-Wake approach includes emissions associated with the upstream production and downstream combustion of fossil fuels. Previous IMO targets only considered emissions based on the “Tank-to-Wake" approach, which only considered emissions from the downstream combustion of fossil fuels.

The new targets include methane emissions, an improvement given previous efforts did not include them. Emissions from LNG-fuelled ships are quite substantial, as some of the LNG evaporates and is vented during the voyage.

While the targets now cover a full Well-to-Wake life cycle and GHG scope, it is still uncertain how this will be implemented. For the time being, only the monitoring and reporting of GHG emissions previously not recorded by the Data Collection System (DCS) will commence.

The IMO’s 2023 GHG Reduction Strategy only applies to vessels greater than 5,000 gross tons (GT). Vessels below this threshold are estimated to account for 5% of the global fleet’s energy and for 5-15% of GHG emissions (UCL, 2025).

To keep the Paris Agreement’s 1.5°C 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 emissions reductions regulations.

Governments need to complement these efforts domestically, actively working to bring their domestic shipping emissions to zero. Currently, only two countries that the CAT analyses explicitly include international emissions in their national net zero targets: the UK and Switzerland.

Domestic action is important where first movers can create the enabling conditions (such as public and private finance, R&D, fuel production, etc.) that will have positive spillover effects for international shipping and third countries. Domestic policies also needs to 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.