Green Shipping’s Best Bet? Efficiency Over Fuel, ABS Warns
ABS sustainability chief says fuel efficiency cuts costs now—while future fuels wait for demand
The American Bureau of Shipping (ABS) has presented a pragmatic roadmap for decarbonizing maritime transport, emphasizing that success lies in operational agility rather than betting on a single future fuel. Speaking at a pre-SMM 2026 panel, ABS sustainability leaders argued that the industry must prioritize efficiency and adaptability to navigate an uncertain regulatory and commercial landscape.
Rostom Merzouki, ABS Vice President of Sustainability, highlighted a persistent disconnect between environmental goals and market realities. While shipowners aim to reduce emissions, charterers continue to prioritize cost over sustainability. “We want to decarbonize. Very few customers, however, are willing to pay a meaningful premium for it,” Merzouki stated. This dynamic means greener vessels offer no guaranteed revenue advantage, leaving operators exposed to regulatory costs without compensatory financial incentives.
Efficiency as the safest investment: fuel efficiency
The financial penalties for inefficiency are already substantial. In Europe, vessels on Asia-Europe routes face combined FuelEU and ETS charges reaching $9 million annually per ship. Beyond regulatory costs, poorly rated vessels suffer commercial disadvantages: those with the worst Carbon Intensity Indicator (CII) ratings charter at lower rates and sell at discounts of up to 15% compared to better-performing ships.
“Fuel efficiency remains the most resilient investment available today,” Merzouki asserted. “It creates value regardless of which fuel or regulation emerges.” ABS identified proven technologies—such as wind-assisted propulsion, air lubrication systems, waste heat recovery, and digital optimization tools—as immediate solutions to reduce fuel consumption and compliance costs.
While the technologies exist, capturing their benefits requires more than hardware upgrades. Merzouki stressed the need for “organizational readiness”—the capacity to implement changes swiftly and effectively. With retrofit demand expected to surge as 2030 approaches, ABS warned that supply chain constraints could limit access to cost-effective upgrades. Operators moving quickly in 2027-28 may secure better terms, while those delaying action risk facing higher costs or unavailable capacity.
Act now or risk missing the window
The ABS analysis also challenges the assumption that dual-fuel propulsion is the optimal path. “In many cases, investing in efficiency generates a stronger business case than investing in fuel flexibility that cannot be fully utilized,” Merzouki noted. For some vessel types and trading patterns, retrofitting existing fleets with efficiency measures may prove more financially viable than gambling on unproven fuel technologies.
Market feedback underscores the urgency. One shipowner reported that no customer had paid above direct regulatory costs for green shipping in the past three years, reinforcing the need for a strategy that delivers value independent of customer willingness to pay premiums.
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