by Dave Akers, IHSA

“In a huge step toward our 2050 carbon neutrality goal, the company has declared war on the office thermostat” – Unknown

The decarbonization of ocean shipping is a critical global effort of the International Maritime Organization (IMO) to reduce the maritime industry’s greenhouse gas (GHG) emissions, with the goal of reaching net-zero emissions by or around 2050.

The International Maritime Organization (IMO) was formed on March 6, 1948, as a specialized agency of the United Nations at a UN Maritime Conference in Geneva. It officially came into force on March 17, 1958, after being ratified by 21 countries. The name was changed from the Intergovernmental Maritime Consultative Organization (IMCO) to the International Maritime Organization (IMO) in 1982. The organization is charged with the regulation of international shipping from the standpoint of safety, security and environmental protection. The IMO is headquartered in London, England.

The IMO has set an ambitious goal of net-zero greenhouse gas (GHG) emissions by or around 2050. This global effort is already impacting and will increasingly affect your supply chain and costs.

Financial Impact: Expect Higher Costs

• Increased Freight Rates: The transition requires massive investment in new ships, retrofitting and developing costly alternative fuels (e.g., green ammonia, methanol). These high costs, including any future mandatory carbon fees/pricing mechanisms, will likely be passed on to you as the shipper, leading to increased freight rates.
• “Green Premium”: You will increasingly pay a “green premium” for verified low-emission shipping services to meet your own corporate sustainability goals.

Regulatory & Compliance Drivers

• Mandatory Measures are Active: Short-term measures like the Carbon Intensity Indicator (CII) rating scheme for existing ships are already in force (since Jan 1, 2023). Carriers are being rated on their operational efficiency.
• Scope 3 Emissions Pressure: Shipping emissions fall under your company’s Scope 3 emissions (indirect value chain emissions). Investor and consumer demands for corporate climate action mean you’ll face pressure to use carriers that can provide transparent, low-carbon transport.
• IMO’s Net-Zero Framework: The IMO is developing a mandatory global framework to reach the net-zero 2050 goal. While the formal adoption vote has been delayed (partially due to U.S. opposition), the underlying push for decarbonization continues.

Supply Chain Uncertainty & Risk

• Investment Uncertainty: A lack of consensus on the future zero-emission fuel (ammonia, methanol, hydrogen) creates technological uncertainty for ocean carriers, which may delay major investments and slow the rollout of widespread “green shipping” options.
• Geopolitical Friction: The U.S. Administration has strongly opposed the proposed global GHG pricing mechanism, viewing it as a “global carbon tax,” and has threatened retaliation. This political friction adds instability to the IMO’s timeline and the implementation of global rules.

Decarbonization is a non-negotiable trend that will increase your shipping costs and require you to adapt your procurement strategy to meet internal and external demands for Scope 3 emissions reduction.

We have come a long way from powering ships with oars and sails to the sequential use of wood, coal, gas, and then diesel, progressing through high and low sulfur content bunkers, LNG, and now racing to develop and utilize new fuels to achieve a 50% reduction in greenhouse gases.

This will be an immense task, demanding major investments and a fundamental shift in how we think about achieving greater sustainability for our planet.