The path to net zero for shipowners and operators requires six elements:

*A robust strategy and roadmap setting forth ambitions and plans

*Four specific decarbonisation levers to reduce emissions: operational efficiency, technological efficiency, fuel transition and shipboard carbon capture; and

*Enablers such as dedicated sustainability teams, strategic investments in green initiatives, internal carbon prices and digitalisation.

The industry is now at a pivotal point with many shipowners and operators ramping up their efforts to decarbonise, according to a survey by the Global Centre for Maritime Decarbonisation (GCMD) and Boston Consulting Group (BCG). "Nearly 60 percent of respondents are now developing decarbonisation roadmaps and three-quarters plan to increase their investments in green initiatives."

The survey saw participation from 128 shipowners and operators across vessel types, fleet sizes and geographies, which collectively own or operate 14,000 merchant vessels and account for $500 billion in revenue. (Exhibit 2)

High decarbonisation ambitions, uneven progress
"Most respondents viewed net zero as a strategic priority, and 77 percent had already set concrete decarbonisation targets. The industry has also mobilised resources to decarbonise: respondents are investing two percent of their revenues into green initiatives, and 87 percent have personnel working toward green objectives."

Three decarbonisation archetypes
The survey found three archetypes - differentiated in outlook, investment appetite and the challenges faced:

"Frontrunners have the greatest ambitions and are willing to invest heavily. They are pushing boundaries, adopting even nascent decarbonisation levers such as wind propulsion and air lubrication. A majority plan to pilot shipboard carbon capture solutions by 2025. Frontrunners are also planning to adopt methanol and ammonia as early as 2026 and 2029, respectively, and the availability of fuels and bunkering infrastructure will be critical to enabling adoption.

"Followers believe in decarbonising their fleets but have tighter investment thresholds and a near-term outlook. They have kept pace with Frontrunners in adopting mature and cost-effective efficiency levers such as main engine improvements and slow steaming but are behind in the adoption of nascent levers, such as wind propulsion and air lubrication.

"Conservatives are still early in their decarbonisation journey, likely due to a lack of awareness and familiarity with the various decarbonisation levers, and the capabilities to assess and deploy them. They are best supported by measures that increase their familiarity with the levers and help contextualise them to their specific fleets and operational requirements."

In July 2023, the International Maritime Organization (IMO) revised its decarbonisation targets for the shipping sector, aiming to achieve net-zero emissions by or around 2050 with zero or near-zero GHG technologies and fuels having at least a five percent uptake by 2030. "The IMO also announced interim indicative decarbonisation targets of at least a 20 percent reduction in the sector’s GHG emissions by 2030, aiming for 30 percent, and at least a 70 percent reduction, aiming for 80 percent, by 2040 - all against 2008 levels."

The GCMD-BCG research highlights five key actions for stakeholders:

*Conduct pilots and facilitate data sharing, especially for nascent levers

*Create innovative financing mechanisms to de-risk adoption of less mature levers

*Raise awareness, contextualise levers, and build capabilities, especially among conservatives

*Start to build out future fuels infrastructure at ports; and

*Develop mechanisms to equalise and share the costs of levers across the ecosystem

"Maritime decarbonisation is a complex, critical endeavour. The successful implementation of these five key actions demands a whole-of-value-chain approach. By working together, stakeholders can transform the maritime sector into a beacon of environmental stewardship, and set a course for a greener future where decarbonisation and commercial success go hand in hand."

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