IMO’s Crucial Moment: How Shipping Finally Started Tackling Climate Change

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In the wake of the International Maritime Organization’s vote to price carbon in shipping fuels, I had the opportunity to sit down with an insider and expert on maritime decarbonization, Tristan Smith. He’s the director of a maritime advisory services consultancy, UMAS, and professor at University College London. This is a lightly edited transcript of the first half of our conversation.

Michael Barnard [MB]: Hi, welcome back to Redefining Energy – Tech. This episode is powered by TFIE Strategy, guiding investors through climate smart bets that will win in the real world and in the market. I’m your host Michael Barnard and my guest today is Tristan Smith, director of UMAS, a maritime advisory services consultancy and professor with the University College London Energy Institute. He’s a maritime decarbonization expert and that’s what this nerdcast will be all about, triggered by some excellent movement by the International Maritime Organization. Welcome Tristan.

Tristan Smith [TS]: Thanks very much.

[MB]: For the discussion I like to start with the person. Apparently, non-nerds actually like to know about people. It humanizes them. Tell us how you got to be someone who’s engaged with the IMO and influential in the maritime decarbonization space.

[TS]: My background is in engineering — actually in defense engineering, specifically warships and submarines. I spent the first part of my career looking at them as integrated systems but decided I didn’t want to pursue a long-term career in that sector. About 15 years ago, an opportunity arose when research funding became available for the challenge of decarbonizing international shipping, and that’s defined my career ever since. During this period, I’ve been building and working with a research group at the university, as well as collaborating with the private consultancy UMAS.

And that naturally led us into exploring policy drivers, working in the policy space, advising governments, but also working with many corporates to understand the state of technologies, corporate decisions, and behavior, so we could think through what was needed. One of the key steps came quite early, around 2014, when I led the third IMO greenhouse gas study. This gave our group credibility within the broader IMO — the UN agency responsible for regulating shipping — and introduced us and our work to many member states. As a result, we became advisors to several of those member states, contributing our science to inform their policy decisions.

[MB]: The trigger for this conversation — the reason I reached out — was some great news out of the IMO recently. But before we get to that, let’s talk maritime shipping. How big of a climate change problem is maritime shipping?

[TS]: We should probably divide shipping into international and domestic. International shipping refers to voyages starting in one country and ending in another, whereas domestic shipping involves voyages that start and end within the same country. So a coastal vessel moving down the west coast of the United States, between ports within China, or even a ferry connecting a mainland and an island — these would all count as domestic emissions. Those emissions fall under the jurisdiction and responsibility of individual countries, much like trucking or automotive emissions, and within the UNFCCC framework, they’re included in the nationally determined contributions, the NDCs.

Then we have the problem of the international fleet, where emissions occur on the high seas. Despite long-running discussions about allocating these emissions to individual countries, responsibility has remained with the International Maritime Organization. The IMO estimates that these emissions are on the order of one gigaton of CO₂ equivalent annually, including both operational and upstream emissions. The precise number could be debated extensively, but operational CO₂ alone accounts for around 700 million tons.

The additional emissions, including methane, nitrous oxide (N₂O), and upstream activities, push this figure closer to one gigaton. That places international shipping emissions on par with countries like Germany or Japan — significant, developed economies with substantial industrial emissions. Overall, maritime shipping contributes roughly 2 to 3% of total anthropogenic CO₂ emissions.

While some have argued that shipping, as a derivative of global economic activity, shouldn’t need to decarbonize, it’s hard to ignore its significant role in climate change. Shipping has a long history as a contributor to global emissions, and unless we take meaningful action to decarbonize the sector, its impact could continue growing. Historically, shipping has expanded alongside global trade and wealth, making it likely to become an increasingly significant issue as the rest of the world strives to meet commitments under the Paris Agreement.

[MB]: Yeah, the number of segments, sectors, and countries in that 1 to 3% range who say, “We’re only 1 to 3%, so we don’t have to do anything,” — that’s not how this works. The largest segments, like cement, account for around 8%, and cement is one of the biggest single sectors globally. Beyond that, there’s a whole group of smaller contributors at 1 to 3% each that together add up to a significant portion of global emissions.

So next, a lot of people don’t know what the IMO is. Why don’t you tell us a bit about that from your perspective, including its responsibilities and accountabilities?

[TS]: I guess it goes back to the point that some things happen with shipping within a country’s jurisdiction, while others occur on the high seas. This distinction actually traces back to the Titanic disaster, which triggered the first steps toward forming the IMO. After Titanic, it became clear we were building and operating vessels that traveled on the high seas and had incidents beyond the jurisdiction of individual countries. It was recognized that minimum global standards, especially around safety, were necessary. This initially focused on life jackets, life rafts, and life-saving equipment, leading to one of the IMO’s key conventions, the Safety of Life at Sea (SOLAS) Convention.

SOLAS is overseen by the IMO — the International Maritime Organization — which is a specialized UN agency with around 176 member countries. Like any other UN agency, countries opt into the discussions to form, revise, and improve conventions. I’m probably going to get the decade wrong, but I believe it was in the 1970s when marine pollution became politically significant, prompting the IMO to adopt the MARPOL Convention, dealing specifically with marine pollution.

Initially, IMO’s work was purely focused on safety at sea, but with MARPOL, it expanded to include environmental pollution issues. Starting with basic ship-related pollution, such as waste dumping and routine discharges, it gradually evolved to address air pollution and, eventually, greenhouse gas emissions. Over time, since MARPOL’s inception, the IMO has increasingly tackled these issues, implementing greater detail and stringency.

[MB]: So, it started with the Titanic, where the problem was an iceberg. Now, the iceberg is green — it’s climate change. From my perspective, the IMO was changing course about as fast as the Titanic did, which wasn’t very fast at all. I mean, the wake-up call was only around 2021, if memory serves. What’s your perspective, from the outside looking in, on why the IMO was so conservative and slow to act on climate change?

[TS]: It has a lot to do with political saliency, but also relates to the broader geopolitics of climate change. For as long as conversations are happening in parallel, there’s always a risk that a precedent established in one agency could have a bigger impact in another. To give a more specific example, in the early 2010s, there was an attempt by the IMO to introduce a carbon price. Long negotiations had started even earlier, around 2007–2008, with multiple countries proposing ways to price carbon and regulate greenhouse gas emissions.

The need for the IMO to regulate greenhouse gases was actually clarified earlier, under the Kyoto Protocol. But in the early 2010s, many of the debates became completely unresolvable. Low-income countries, particularly led by China, argued that the IMO needed to acknowledge the UNFCCC principle of common but differentiated responsibilities, meaning developed countries should lead in decarbonizing. The developed economies within the IMO countered by saying that the IMO treats all countries equally, so giving preferential treatment was incompatible.

This philosophical standoff prevented any meaningful policy conclusion, causing the organization effectively to pivot toward discussions on energy efficiency, as energy efficiency was less contentious than greenhouse gas emissions and the associated politics. They managed to pass the first regulation — the Energy Efficiency Design Index, I believe — around 2012, having sidestepped the unresolved discussions on greenhouse gases.

However, it wasn’t until 2015, when the Marshall Islands openly confronted the failure to move beyond energy efficiency toward actual climate change actions, that the IMO began seriously re-engaging with greenhouse gas emissions. This shift was significantly aided by the Paris Agreement, agreed upon through a separate UNFCCC process. Paris moved the conversation from simply common but differentiated responsibilities (CBDR) to CBDR-RC, introducing the concept of responsibility and capability. This expanded the idea beyond developed economies, establishing that all countries have a shared responsibility for solving the climate issue, even if they weren’t historically responsible.

That clarification from the UNFCCC allowed a more pragmatic approach within the IMO. It remained slow, so I don’t disagree with your characterization of the IMO as being like the Titanic, but it was a process that had to pass through various stages. First came adopting a strategy to clarify objectives in 2018. Then, through the 2020s leading up to 2025, came the adoption of policy measures, with an agreement now reached, at least in principle, on measures with the potential to achieve deep emissions reductions.

[MB]: There are two things I’m struggling with, figuring out which one’s more interesting at the moment, but we’ll get to both. The first is the actual vote itself, and then the substance of the agreement. So, why don’t we start by talking about the motion that was put forward for the vote, characterize that clearly, and then we’ll break it down in detail. After that, we can dive into the politics of the vote itself, because that was quite contentious.

[TS]: Just to clarify, because I remembered what “RC” stands for, it’s “respective capabilities.” Apologies for that.

After a lengthy process, starting with initial suggestions from countries about policies to tackle the challenge, by 2023 the shipping sector had upgraded its target. It now aims to achieve net-zero emissions by 2050, along with significant greenhouse gas emission reductions earlier, specifically a 70% absolute emissions reduction by 2040, striving for an 80% reduction.

Alongside this, referencing earlier political discussions, there’s recognition that some countries feel climate change isn’t their responsibility, and they want differentiation in efforts or acknowledgment of economic consequences. Thus, there’s a requirement that these measures address varying economic impacts on different countries, ensuring the policy outcome supports a just and equitable transition. Essentially, there’s a greenhouse gas mitigation component and a socio-economic impact component addressing the broader consequences of mitigation efforts.

The final conclusion from years of policy dialogue was a concept mandating a progressive reduction in the greenhouse gas intensity of ships over the next 25 years using specific limits. Ships exceeding these limits must pay fines — that’s the 10-second version.

In practice, the policy is more complicated. There are actually two limits. If ships exceed the first threshold, they pay a small fine; if they exceed a second, more severe threshold, they pay a substantially higher fine. The aim is for the global fleet to operate somewhere within the middle band, incentivized to avoid using fossil fuels and just paying to pollute. Instead, ships are financially motivated to reduce emissions, as this becomes more cost-effective than paying the higher penalty fee.

There’s considerable additional detail, but that’s the slightly more comprehensive explanation.

[MB]: So getting them into a band that’s lower intensity, that decreases over time.

[TS]: Yes, exactly.

[MB]: And they pay if they exceed certain thresholds — there are a couple of limits involved. To put some numbers on this, what are the actual figures associated with these limits? Because in one case, the fines are very large, and in the other, they’re still bigger than any current carbon price today.

[TS]: So I’ll start with the numbers on the GFI limit. The GFI limit value for 2040 is set at 65%. Ships must achieve at least a 65% reduction in their greenhouse gas intensity by the time they’re operating in 2040. If they exceed that limit, any emissions above that threshold get charged essentially a carbon price of at least $380 per tonne. That penalty fee is designed to be above the marginal cost of operating at the compliance point — the GFI limit.

You can estimate the cost of fuel and its carbon intensity to calculate roughly what the marginal cost would be for compliance, and then set the penalty fee higher to create a strong financial incentive to operate within compliance. That’s the logic behind the $380 figure.

Then there’s a middle band. Greenhouse gas emissions occurring within this middle band (which only partially covers total emissions) get charged a fee of $100 per tonne. This is deliberately set below the marginal compliance cost, making it more economical for companies to pay rather than achieve direct compliance.

Additionally, the precise direct compliance threshold for 2040 hasn’t yet been set — that’s left blank in the current regulation and will be revisited in future negotiations around 2030. But as a reference, by 2035, the direct compliance threshold is set at a 43% reduction. Ships must achieve at least this 43% reduction to avoid paying any fee at all by the mid-2030s.

[MB]: So let’s circle back to the politics, because it was an interesting process. You mentioned 166 countries, which is notable because, as far as I know, there aren’t actually 166 countries with coastlines — many African countries, for example, are landlocked. So how many countries actually participated in the vote, and what happened during the voting process? You know, it was a pretty fiery event.

[TS]: From the sounds of it, “fiery” — I don’t know if I’d call it fiery as much as relatively unsurprising, given the current geopolitical context. First of all, voting is not the standard procedure at the IMO. Typically, the organization tries to make decisions through consensus, meaning the chair confirms that the room has agreed without formally calling a vote, and then the process moves forward.

In this instance, the chair attempted to declare consensus, but Saudi Arabia objected. They stated clearly they weren’t satisfied with the proposed consensus decision from the Marine Environment Protection Committee (MEPC), and so they requested a formal vote. Any member state at the IMO can ask for a vote if they feel consensus hasn’t been genuinely achieved, or if the decision being suggested by the chair doesn’t meet their threshold for acceptability. The IMO then has specific procedures outlining the voting thresholds required.

At this meeting in April, the specific question was whether the IMO should agree to circulate the proposed amendment for further consideration. The required threshold for this decision was a simple majority — over 50%. Voting was open to all 176 IMO member states, but they had to be physically present and actively engaged; there’s no option for proxy or postal votes.

The final vote count was 63 countries voting “yes,” 16 voting “no,” and approximately 29 abstentions. Another noteworthy aspect — already on public record — is that the United States exerted significant pressure against supporting the vote. This pressure likely explains some of the abstentions. The U.S. government reached out directly to the capitals of various countries, warning that supporting this policy might lead to reprisals from the U.S., such as tariffs or other trade restrictions. Consequently, several countries faced difficult decisions about whether to actively endorse the policy or abstain to avoid potential consequences.

In the end, we had a relatively predictable dynamic: some countries strongly opposed the measure, others strongly supported it, and fortunately, there was a majority in favor, leading to the decision being adopted.

[MB]: What I’d read was that the United States basically publicly told everyone in the meeting not to vote for it, and then stormed out.

[TS]: That sounds like a bit of embellishment. I mean, it’s not completely inaccurate, but I don’t think there was much “storming.” They weren’t present during various stages, and they didn’t participate in the final vote.

[MB]: So who does this now apply to? If the United States has, you know, excluded itself, does it apply to them regardless?

[TS]: Not yet, but yes, in due course. This vote was only about agreeing to circulate the MARPOL amendment. The standard IMO procedure allows six months for countries to reflect and double-check their positions. Then, in October, there will be a formal adoption discussion. Normally, adoption is achieved by consensus, but given recent events, it’s quite possible that adoption will also require a vote.

If the adoption vote passes, unfortunately, there isn’t any obvious mechanism for a country to avoid the effects of the regulation, even if it tries to opt out. A country can formally opt out, but this is international shipping we’re talking about. If the United States opts out, voyages between the U.S. and other countries would still be covered if the other countries involved are part of the regulation. Essentially, a voyage becomes regulated whether the United States participates or not.

This highlights one of the advantages of the IMO process: it can manage situations involving countries that don’t wish to participate because enforcement ultimately falls to port states. Ships operate like taxis of the sea; they want maximum optionality in their routes. They don’t want to be limited to sailing only between two opt-out states. Instead, they want to freely access ports in Europe, Singapore, Africa, Latin America — everywhere.

Practically, it’s unlikely multiple major countries will opt out. So once a regulation passes, it generally means the vast majority of ships must comply. We’ve seen this repeatedly at the IMO. There’s always initial nervousness about passing thresholds for adoption, but once a regulation is formally adopted, such as the recent sulfur regulation implemented in January 2020, compliance levels tend to be very high. You can confirm this by tracking the commodities used as energy products in shipping.

Ultimately, ships prefer to keep their paperwork and compliance in order, avoiding fines or detention at ports enforcing these regulations. So yes, this regulation is another good example — assuming it reaches adoption — of something very difficult for any single country to effectively block.

[MB]: Well, let’s just touch on VLSFO [very low sulfur fuel oil], because the adoption was remarkably quick. Can you expand a bit on that?

[TS]: What do you mean the adoption was quick?

[MB]: The very low sulfur fuel oil — the decision was made, and then the market, particularly the fuel oil and bunker markets, seemed to respond quickly. It wasn’t overnight by any stretch of the imagination, but looking from the outside and tracking the products being sold and their volumes, the growth of VLSFO was quite rapid.

[TS]: Yeah, it was interesting. I guess there was awareness that this scenario was coming for at least a decade before refineries actually had to provide VLSFO. The original concept of the regulation was agreed upon quite early, with a specific review scheduled initially for 2018. That review aimed to evaluate whether enough low-sulfur fuel would be available for the regulation to enter into force without causing disruption, essentially preventing a scenario where ships couldn’t buy fuel at all.

What actually happened was the industry argued successfully to move that review forward to 2016. I was involved in the study as one of the authors, and our job was to address the critical hypothetical question: “Can this realistically enter into force in 2020?” We carried out extensive modeling and worked closely with industry players. Another consortium, comprising industry stakeholders, took a more pessimistic view about potential fuel availability. But ultimately, our conclusion was that as long as the IMO provided clear guidance early enough, sufficient low-sulfur fuel would indeed become available. Refineries could retrofit relatively quickly, and alongside the number of ships installing scrubbers, compliant fuel options would be ensured.

Fortunately, the member states listened to this advice, and by 2018, it was definitively confirmed that the regulation would enter into force on January 1, 2020. There had been an option to postpone until 2025, but the 2018 discussions concluded confidently that the January 2020 date was feasible.

In the two-year window following this decision, refineries completed retrofits, and around 4,000 ships — many of them larger vessels — installed scrubbers. Those ships using scrubbers continued to burn heavy fuel oil, ensuring that this fuel still had a market, while the remainder of the fleet transitioned to VLSFO, marine diesel oil, and other compliant fuels.

[MB]: The VLSFO switchover was fascinatingly quick from my perspective. A chemical process engineer I know, who was initially quite skeptical, is also likely surprised by how smoothly it happened. I was particularly surprised by how few scrubbers were actually installed; scrubbers never really became a significant growth market. This rapid transition is just an indication that significant industry changes are possible in a relatively short time, and it clearly shows the high compliance levels achievable.

That’s the good news story — like the, oh gosh, I’m forgetting the exact term now — the reduced-emissions compliance areas, like the one in the Mediterranean. What’s the specific term for those?

[TS]: Emission Control Areas. Yes, those had the same effect. The implementation was relatively quick, and ships switched over very rapidly in the end.

[MB]: Exactly. Could you give just a bit more detail on those? Because I think most people have no idea they even exist.

[TS]: This is a good example of how, in several instances, IMO regulations are often preceded by similar regulations implemented within a more limited geographical area. This was exactly the approach taken with sulfur emissions. When the issue of sulfur oxide emissions and particulate matter was gaining political saliency, primarily because of concerns like acid rain and other negative environmental impacts, regional efforts became a precursor to broader IMO regulations.

[TS]: So PM and SOx have some of their most damaging effects when they’re close to shore.

[MB]: Sulfur dioxide: SOx. PM: particulate matter.

[TS]: Rather than immediately regulating the entire global shipping industry, including ships in the middle of the Atlantic or Pacific Ocean far from population centers, the concept emerged of controlling emissions within limited geographical areas agreed upon by neighboring countries. The first Emission Control Areas (ECAs) were established in the Baltic Sea, followed by the North Sea and the English Channel, and later expanded to North America.

These early ECAs involved a relatively small number of countries willing to act as pilot regions for regulations that would eventually apply globally. The pilots demonstrated that vessels and fuel supply chains could indeed adapt to stricter emission specifications, particularly regarding sulfur content in marine fuels. The ECAs also served as incubators for alternative compliance technologies, specifically scrubbers. Starting around 2015, within these emission control areas, scrubber technology and specialized low-sulfur marine fuels were introduced. This provided valuable real-world experience regarding machinery compatibility and the operational costs associated with scrubbers.

Consequently, by the time discussions were underway in 2018 and 2019 about whether to implement these regulations globally in 2020 or delay until 2025, there was already substantial data available. Policymakers could confidently refer to actual operational costs from the ECA experiences and the lessons learned about fuel supply chain adaptations.

This approach, of course, isn’t rocket science to anyone familiar with transitions more generally: it helps to begin within niche applications. ECAs provided exactly this — a niche environment involving a limited geography and progressive countries ready to move faster than others, helping pave the way for broader global regulations by addressing uncertainties and reducing perceived risks.

[MB]: This is a case where affluent countries in Europe and North America were pushing for action, and it’s an area where you don’t see the same contention between developed and developing countries. But as I understand it, while it’s not formally recognized as an Emission Control Area under the IMO, China has established something domestically that operates remarkably like one, it just hasn’t yet been formally adopted by the IMO.

[TS]: There’s nothing stopping countries from putting in place national regulations, including on international ships. China is one example. I struggle to think of many outside of Europe and North America that have also unilaterally regulated shipping, but it’s certainly an option, especially when it comes to pollutants that directly harm air quality and public health in densely populated areas. There’s strong logic behind saying, “If ships are within a certain distance from our coastline or within our ports, we will ensure they’re not contributing to harming or killing our citizens.” It’s a logical step, though it does require a regulatory framework that not all countries currently have in place.

[MB]: Interestingly, the United States — well, I’m not going to get too deep into it — but I would argue they’ve over-regulated their maritime industry to the point where it’s suffered massively because of the Jones Act. I’m on record as saying the Jones Act isn’t fit for purpose anymore, and it’s actively hindering decarbonization efforts and the growth of domestic shipping. But that’s the United States, and it’s a weird place on many fronts right now.

Let me ask another question though, because we’ve talked about VLSFO and marine diesel oil. But what about the growth of LNG? It feels like the creation of emission control areas might have driven some growth in LNG as well, or at least it should have. Do you see that connection, or am I just perceiving correlation where causation doesn’t actually exist?

[TS]: No, that was absolutely the story for LNG before greenhouse gas emissions became a primary driver. This goes back to the early 2000s and the 2010s period, and it wasn’t just about controlling sulfur oxides (SOx) but also nitrogen oxides (NOx). Norway, in particular, played a very influential role here. Scandinavia frequently appears in the story of shipping regulation, not just through the IMO but also via national and regional initiatives that often act as incubators for broader regulations.

Norway started supporting LNG as a marine fuel specifically because it would help ships sailing in the Baltic and the North Sea — both early Emission Control Areas with strict sulfur regulations — address compliance issues. Additionally, LNG-fueled machinery could be designed and optimized for compliance with the forthcoming NOx regulations, which formally came into effect around 2019. NOx is another pollutant that isn’t purely about fuel choice but also relates to how fuel is combusted in the engine. Some LNG engine solutions offered significant advantages, addressing both SOx and NOx pollution in a single package.

Around the same period these arguments were gaining traction, the IMO began signaling that it was taking greenhouse gas emissions more seriously. At that point, the LNG industry jumped on the fact that LNG inherently has lower carbon intensity compared to conventional marine fuels, at least chemically. Thus, LNG started to be presented not just as a solution to SOx and NOx, but also as part of the answer to CO₂ emissions.

It’s definitely more than correlation. LNG’s early growth was closely tied to the emergence of Emission Control Areas. Another key factor supporting LNG adoption was the rising use of LNG as fuel by the vessels carrying LNG itself — initially via turbine-based solutions, but increasingly through internal combustion engines. This helped evolve the technology and paved the way for broader adoption in standard merchant shipping, ultimately enabling larger two-stroke marine diesel engines optimized for LNG use.

[MB]: It was fascinating to me — the growth of LNG, much like VLSFO, happened quite quickly. As I looked closer, certain use cases became obvious: cruise ships, tourist vessels, ferries, really anywhere there were human passengers onboard. Burning LNG stinks a lot less, doesn’t leave fumes, and generally makes passengers less seasick. After that initial growth, adoption continued even more broadly.

But here’s an interesting question, since I have you as an expert: The International Council on Clean Transportation (ICCT) recently threw something of a hand grenade into LNG as a maritime fuel with its Fugitive Unburnt Methane Emissions from Shipping (FUMES) study. What’s your take on that? Could you elaborate on what that study revealed? And is there a technical response available? Is there a viable solution to the issues they identified?

[TS]: So, when you look beyond the headlines about LNG, there are two primary reasons why it might not be as good as initially claimed. The first issue is fugitive methane emissions occurring onboard ships — often called methane slip. This happens because you don’t combust all the methane fully in the engine, resulting in methane escaping directly into the exhaust. Methane is an extremely potent greenhouse gas, so when you factor in these emissions alongside CO₂, the supposed savings from using LNG diminish significantly. Although chemically burning methane could yield around a 23–25% CO₂ reduction compared to heavy fuel oil, counting methane slip can substantially offset those reductions.

The second issue arises upstream. In the production of methane (just as in oil production), there are fugitive emissions at every stage — from the extraction wells through pipelines, right up to the point where the gas is liquefied and transferred to the ship. When these upstream emissions are accounted for and combined with onboard methane slip, the result is that LNG might actually provide no improvement over heavy fuel oil on a total greenhouse gas, or well-to-wake, basis.

This is partly because, as you mentioned earlier, heavy fuel oil is essentially a refinery byproduct or waste product. It therefore carries relatively lower emissions on a full lifecycle basis, since it’s making use of something that would otherwise require disposal. Of course, there’s debate about exactly how to account for those upstream emissions, but broadly speaking, we’ve produced analyses similar to the ICCT’s FUMES study and arrived at comparable conclusions.

We collaborated extensively with the World Bank on this issue because there was clearly growing momentum behind LNG as a marine fuel. Our concern was that widespread adoption posed a significant risk of technology lock-in. Even in the best-case scenario, with minimal upstream emissions and zero onboard methane slip, using fossil-based LNG can only achieve relatively modest decarbonization. Thus, we identified a genuine risk in the late 2010s that countries could lock themselves into infrastructure dependent on LNG, complicating the shift towards deeper decarbonization solutions we knew would eventually become essential, even if the IMO hadn’t yet formally regulated these solutions.

At the time, it was challenging to convince stakeholders that the IMO would implement strong regulations. Now, looking back with the benefit of having seen the regulations adopted this past April, we can confidently say, “Yes, the IMO did regulate.” But in the early 2010s, it was understandably difficult to convince the industry of the coming regulation and its likely stringency. Consequently, there was ongoing skepticism over whether technology lock-in was a real risk or simply something scientists were raising as a theoretical concern.

[MB]: Let’s tease out a couple of things here. Norway is significant in this space. It actually has a commercial shipbuilding industry larger than the United States, despite only having around five million citizens. The United States, on the other hand, with approximately 400 million people, used to be the largest industrialized nation globally, but has largely outsourced its shipbuilding industry to countries like South Korea, Japan, and now predominantly China. The last figures I saw indicated around 59% of all ship orders went to China, complicating the political landscape around U.S. shipping considerably.

Another critical point I’d like to highlight is that Norway, like the United States, is a major natural gas extractor and distributor. While the United States has surpassed Norway in total extraction, Norway deliberately engineered its gas infrastructure to minimize upstream emissions. They use proper actuators not driven by gas pressure, avoid venting pipes during maintenance, and carefully manage leaks. Conversely, the U.S. prioritized cost-saving in its infrastructure, giving little attention to methane leaks. As a result, the roughly four million miles of methane infrastructure in the United States leak extensively, exacerbated by shale extraction.

Thus, LNG from Norway, paired with properly engineered ship engines, can indeed represent an emissions advantage. But most engines globally aren’t built to that standard. The ICCT’s FUMES study notably found methane slip from engines to be around 6%, nearly double the industry’s previously assumed 3%. When combined with upstream emissions, the total impact is significant. In one calculation I ran for U.S.-sourced LNG, emissions came out around 120% of traditional heavy fuel oil. Clearly, that’s not a win.

Despite these findings, LNG managed to bypass intense scrutiny partly because the industry heavily pushed a narrow “tank-to-wake” perspective rather than the comprehensive “well-to-wake” view. Similar marketing strategies were used for fuels like methanol and ammonia, where the upstream emissions make them multiples of heavy fuel oil’s emissions when unabated. The methanol industry, in particular, marketed their solution effectively, embedding their narrative strongly within the sector. However, that story is beginning to fall apart as awareness grows about the full lifecycle emissions. It is what it is. However, let’s circle back to the GHG discussion.

[TS]: I think — can I just add something before we go back to the GHG discussion? This is helpful context because it’s all closely related. Shipping is a peculiar business: most decisions are made business-to-business, and a large portion of what’s transported globally is fossil fuels. As a result, you’ll typically find oil and gas majors deeply embedded, as charterers, owners, fuel suppliers, or key stakeholders across various parts of the maritime value chain.

Clearly, this significantly impacts the tanker segment, as they’re directly carrying fossil fuel cargoes. But this influence extends broadly throughout the industry. The oil and gas sector’s presence and influence are pervasive. They have considerable leverage and reinforce certain narratives easily, such as those around LNG.

We’ve tried to study the LNG transition and the roles different actors have played. It was clear that the Norwegian government had a significant early role, creating favorable conditions because they genuinely wanted LNG to succeed. However, beyond that initial push, the continued momentum was primarily driven by the oil and gas sector’s pervasive presence within the maritime community. Their influence extends deeply, including into the classification societies, helping to push the narrative that LNG was the obvious “no-brainer” investment choice for dual-fuel technology.

This message has had some traction, though perhaps not as universally convincing as initially hoped. Still, it’s been remarkably challenging in such an environment, with a deeply ingrained industry culture shaped heavily by oil and gas interests, to nudge the sector toward more genuinely sustainable directions.

[MB]: Yeah, the numbers I typically use indicate about 40% of total international shipping tonnage is coal, oil, and gas. In my projections, that mostly disappears, primarily because shipping costs will rise significantly with alternative, decarbonized fuels. As fossil fuels are phased out, the vast majority of petroleum and similar products extracted will no longer be burned. The 15–25% that currently goes into petrochemicals and similar products will likely persist, but overall it represents a major reduction. Another 15% of global shipping tonnage is raw iron ore, which is also in structural decline. So altogether, roughly 55% of current deepwater tonnage is on a downward trajectory in my view.

This presents an accidental but significant win for decarbonization. Every step we take away from fossil fuels — considering about 11% of all fossil fuels are consumed by the fossil fuel industry itself — amplifies our gains. The IMO and the global shipping industry are set to experience major shifts in political power dynamics over the coming decades as fossil fuels decline. Watching these changes unfold has already been fascinating and will continue to be so.