The shipping sector is traditionally viewed as being relatively hard to decarbonise, due to long asset lifetimes, complex ownership arrangements, and the inherently international nature of the sector. Forward planning and international leadership are therefore required to deliver meaningful progress. The majority of shipping abatement is expected to come from the transition to using low-carbon fuels such as ammonia, methanol, or hydrogen within ship engines. Indicators that track enablers and delivery of this transition are key to monitoring progress in this sector. In this section, we set out our proposed framework for monitoring progress in the shipping sector. While this identifies the potential indicators that we intend to track, we have currently only fully developed a subset of these, pending crucial upcoming decisions at UK and international level.
- UK decisions. The Government is planning to develop a Course to Zero strategy for decarbonisation of the domestic shipping sector. This will then be embedded in the update of the Government’s Clean Maritime Plan.
- International decisions. The International Maritime Organisation is due to refresh its Initial Greenhouse Gas Strategy in 2023, presenting a crucial opportunity for this to be made more ambitious and aligned to a Net Zero 2050 goal.
How we monitor shipping
Decarbonising the shipping sector will require a combination of technological developments that lead to the production and supply of low-carbon fuels and their use in more efficient vessels together with operational improvements that make journeys more fuel-efficient.
- These supply and demand challenges make up the two main branches of our Monitoring Map for shipping (Figure 9.1). The left-hand branch represents the uptake of low-carbon fuels and technological improvements to ships while the right-hand branch covers operational efficiency.
- Ultimately, the move to low-carbon fuels (e.g., ammonia) will deliver the majority of abatement for this sector. However, these fuels and the engine technology to consume them are still at a relatively early stage of development, so in the short-term, actions to improve operational efficiency are important to deliver emissions reductions while innovation and market development are ongoing.
The Monitoring Map shows how domestic policies, supported by international collaboration and commercial decisions, can enable the delivery of the outcomes required to decarbonise the shipping sector.
- Around half of UK shipping emissions are from international voyages, emphasising the importance of international collaboration to support effective action. To give operators the confidence to invest in new engine and fuel technologies, low-carbon fuel supplies and supporting infrastructure will need to be made available globally. The International Maritime Organisation is the body responsible for agreeing coordinated action in this sector, while multilateral agreements can also help to establish viable low-carbon shipping corridors.
- Domestic policies can play a role in driving this forward too. These include innovation funding to stimulate research and development and support for early adopters and infrastructure deployment. Ultimately, regulation in the form of fuel mandates or uptake targets could also be effective. Regulations can also require manufacturers to produce vessels that are lower-carbon, both through improved ability to use lower-carbon fuels and through vessel design to improve energy efficiency.
- This combination of international and domestic action will be crucial to accelerate development and deployment of low-carbon shipping solutions, both in the form of clean fuels and the ability for vessels to make use of electricity when in port. If successful and enhanced by a supportive policy and regulatory environment, this will lead to the use of petroleum-based fuels being displaced by low-carbon alternatives, driving emissions reductions.
- Efficiency improvements within the existing fleet are dependent on operational decisions by ship operators. Approaches to reduce demand, such as efficient trade policy, onshoring, and effective logistics, can be of benefit in reducing the overall volume of shipping required. At the same time, audits of operating efficiency and expectations around supply chain emissions reporting can ensure that ships adopt measures that can reduce their emissions during voyages. These actions are not dependent on technological advances and could offer meaningful savings in both emissions and costs.
Figure 9.1 Monitoring map for shipping
Source: CCC analysis
The Committee intends to conduct a full update of its indicator framework for shipping following the Government’s publication of their response to the Course to Zero consultation and an updated Clean Maritime Plan.
For each indicator we assign an ID number and identify a current data source. We explain why each indicator is important and what we are looking to see in our monitoring. The historical data and, where available and relevant, the benchmark trajectories against which we compare them are presented in the supporting data alongside our Progress Reports. We discuss policy needs (flagged as ‘Policy’) alongside the most relevant outcomes.
Required outcomes: Use of low-carbon shipping fuels
These indicators monitor the uptake of low-carbon energy sources in the UK shipping sector.
Indicator: Low-carbon shipping fuel supply
- This indicator tracks the production of low-carbon shipping fuels such as ammonia, methanol, and hydrogen as a percentage of the overall fuel consumed within the shipping sector. This total is based on sales from maritime fuel bunkers, which is a proxy rather than a direct measure of the fuel consumed given that international vessels have the opportunity to choose to refuel abroad rather than in the UK.
- If the UK’s deployment of low-carbon refuelling infrastructure proceeds ahead of overseas nations, then there is a risk that more vessels will choose to take on higher-carbon fuels abroad, lessening the emissions reductions that will be delivered by UK policies.
- Alternatively, it could provide a competitive advantage in the UK and help other countries to decarbonise, as demand for low-carbon fuels grows internationally.
- Low-carbon shipping fuels are currently only being produced in very small trial volumes. In future, we intend to capture this data through Government’s annual statistical reports on fuels produced under the Renewable Transport Fuels Obligation (RTFO). The RTFO was extended to cover fuels produced for use in maritime applications in 2022, so we expect these to appear within these publications in future.
- Policy. The Government’s Carbon Budget Delivery Plan deployment assumptions state that low-carbon fuels are to expand to 42% of total domestic shipping fuel use by 2035. Given the pivotal role that low-carbon fuels play in delivering abatement in this sector, effective policy is essential at both an international and a domestic level. This is needed to support research and development and market scale-up during the 2020s, to enable widespread uptake through the 2030s.
Indicator: Use of electricity (shore power and direct electrification)
- This indicator measures the use of electricity in the shipping sector, as a percentage of all energy consumed. This is currently nominal, but going forward we will need a reliable data source to track progress.
- This indicator is compared against the usage of electricity in the Committee’s Sixth Carbon Budget Balanced Pathway.
- Increased electricity use can be through the direct electrification of certain shipping routes, although this is likely to only be viable for smaller vessels and shorter routes.
- The indicator also monitors the use of electricity while stationed in port – shore power. Shore power offers an opportunity for vessels to avoid having to rely on onboard petroleum-based engines while stationary by plugging into the local electricity grid. This can reduce emissions and also improve local air quality.
- Policy. Effective policy in this area should involve mandates for major ports to provide electric connections that are capable of powering vessels at berth, along with investment in the distribution grid to deliver low-carbon power to supply these. Incentives and targeted support may play an enabling role, particularly where substantial grid upgrades are required.
Required outcomes: Lower shipping demand
These indicators monitor demand in the shipping sector.
Indicators: Freight demand
ID: SH3, SH4, SH5
Source: DfT port and domestic waterborne freight statistics (Table PORT0102)
Units: Million tonnes (Mt)
- These indicators record the amount of freight moved by ship through UK ports. Separate data are provided for domestic voyages (between UK ports), outbound international voyages (from UK ports), and inbound international voyages (to UK ports). They are based on DfT’s port and waterborne freight statistics on the number of tonnes of freight moved by ship.
- It should be noted that inbound international vessels will typically refuel outside the UK prior to departure, and thus their emissions will not be captured within the UK bunker fuel sales data on which current emission inventories are based. Nonetheless, these journeys contribute to UK-based shipping activity and to global shipping emissions, so they are still important to monitor.
- Moving to an activity-based measure of UK shipping emissions, capturing not only vessels refuelling in the UK but all those contributing to UK demand, would provide a more accurate picture of the UK’s contribution to global maritime emissions. This could be particularly important if refuelling abroad becomes more prevalent to avoid potential high-carbon levies in the UK.
- Policy. Demand-side policy should take a holistic view of the transport sector, ensuring that incentives are well aligned between road, rail, and maritime freight to ensure that operators are incentivised to make the lowest-carbon choice.
- This could include extending emissions trading arrangements to cover all means of freight haulage and targets for modal shift.
- International trade policy can also shape UK shipping demand, for instance through localising supply chains and reducing or consolidating shipments of heavy goods.
- Effective use of data can lead to improved logistics or more fuel-efficient steaming speeds, reducing the number of voyages required or improving their carbon-intensity.
Planned updates to the indicator framework
The Committee intends to conduct a full update of its indicator framework for shipping following the Government’s publication of their response to the Course to Zero consultation and an updated Clean Maritime Plan (and any emerging plans at the International Maritime Organisation). In particular, data on consumption or production of low-carbon fuels and use of electrification in maritime applications will be vital to enable us to monitor progress towards the key required outcomes in this sector.