In the drive toward global decarbonization, the maritime sector finds itself at a crossroads. While short-term targets seem attainable, long-term ambitions to reach net-zero emissions by 2050 pose a monumental challenge. According to the latest annual review by the Decarbonization Shipping Foundation (DSF), this is largely due to the current absence of scalable alternative fuels. To address this, DSF emphasizes that strong governmental involvement is crucial, as history shows that no alternative energy source has achieved widespread adoption without robust state support. But beyond government intervention, the maritime sector must look inward, adopting benchmarking and greater transparency as central elements of its strategy for change.
DSF’s report underscores a crucial point: while alternative fuels are the future, the maritime industry does not have the capacity to lead in their development. The creation and scaling of viable low- or zero-carbon fuels will require not only enormous investments but also regulatory support. Governments need to mitigate financial risks for companies willing to transition to greener fuel options by setting a conducive regulatory framework. This approach not only incentivizes the adoption of new energy technologies but also helps bridge the gap between ambitious climate targets and the current limitations of the fuel market.
However, while the industry waits for governments to set these wheels in motion, DSF highlights that the maritime sector could immediately accelerate decarbonization efforts by improving its transparency and benchmarking practices. For many shipping companies, the lack of a standardized way to measure and compare emissions performance across the industry has hindered widespread adoption of emission-reduction technologies. With most such investments requiring long repayment periods, industry players remain hesitant to take the leap without clear metrics that reveal their standing relative to their competitors.
Benchmarking could serve as a catalyst for encouraging investments in emission reduction and operational efficiency. DSF points to the Carbon Intensity Indicator (CII) as an example of a metric that, if widely adopted and publicized, could drive shipowners and operators to aim for performance above industry standards. When competitive analyses are shared publicly, it can foster a positive cycle in which companies strive to exceed set benchmarks. This transparency not only motivates individual companies but also establishes a baseline that fosters industry-wide improvement, setting clear expectations for what constitutes best practice.
Transparency and cooperation across the maritime sector will be essential for meeting ambitious emission targets.
One of DSF’s more innovative proposals is the implementation of a fuel budgeting system on a per-route basis. This approach would establish a transparent and agreed-upon fuel budget for a specific voyage, enabling carriers and shippers to set expectations for fuel consumption and emissions. In this model, cargo customers are provided a fixed price for a voyage, with the understanding that certain unpredictable factors—such as weather—may still affect actual fuel usage. By agreeing on a fuel budget, both parties gain clarity on energy costs, enabling them to align on efficiency goals and distribute risk more fairly.
The concept of a fuel budget offers significant potential benefits. Not only does it create a structured approach to measuring fuel efficiency, but it also opens the door for what DSF describes as an “equity kicker.” Under this system, any fuel saved below the established budget translates into shared savings or bonuses for operators, thus directly rewarding efficiency. For ship operators, this framework offers an incentive to invest in technologies, retrofits, and operational strategies that reduce fuel consumption. It places a tangible value on energy efficiency that could reshape the industry’s mindset around value creation, steering the market toward consolidation under operators who prioritize sustainability.
While fuel budgeting could revolutionize operations in the short term, DSF also sees it as a stepping stone to more equitable collaboration as the industry transitions to alternative fuels. As these new fuel types gradually become available and as the infrastructure to support them develops, a route-based fuel budgeting system allows companies to adapt to changing energy costs and emission targets incrementally. DSF suggests that such a system should be regularly reviewed and adjusted to ensure it aligns with global climate goals, creating a dynamic framework that responds to progress in emissions reduction technology and policy.
Yet, this vision hinges on a significant shift in the industry’s current approach to transparency. For benchmarking and fuel budgeting to function effectively, shipping companies must be willing to share performance data openly—a concept that is not universally embraced. The traditional lack of transparency in the maritime sector has long been a barrier to coordinated environmental action, with many companies reluctant to disclose operational inefficiencies or emissions data. Without the necessary benchmarks, however, it will be difficult for the industry to achieve meaningful and measurable progress.
DSF argues that embracing transparency is essential to building an industry that is accountable for its environmental impact and proactive about reducing it. When companies openly share emissions data, they can collectively establish what DSF calls “what good looks like,” setting realistic, data-driven standards for sustainable operations. In a sector where competitive advantage often rests on proprietary practices, shifting toward a shared, transparent standard of performance may feel counterintuitive, yet it is precisely this collective effort that will drive real change.
Given the maritime sector’s limitations in developing its own alternative fuels, a well-defined benchmarking system, along with fuel budgets, could provide a robust interim solution. It would allow the industry to make progress on decarbonization while waiting for regulatory frameworks and alternative fuel infrastructure to mature. DSF’s proposal calls for companies to unite around a shared vision of sustainability, where efficiency and accountability are incentivized as core values. By adopting benchmarking and transparency, the maritime industry could foster a culture that values long-term collaboration, distributing both the financial risks and the benefits of sustainable practices more evenly.
This approach, however, is not without its challenges. Industry-wide change demands more than new policies; it requires a transformation in the mindset of stakeholders accustomed to operating under different priorities. DSF acknowledges that achieving widespread buy-in for benchmarking and transparency will take time and may require a cultural shift within the industry. But as global climate targets loom and the pressure to reduce emissions intensifies, the maritime sector has little choice but to adapt.
Ultimately, the success of the maritime industry’s decarbonization efforts will depend on its willingness to pursue collaborative, transparent strategies. By introducing fuel budgets and making benchmarking an industry norm, the sector could not only meet its short-term decarbonization targets but also build a foundation for achieving its longer-term climate ambitions. For an industry accustomed to opacity, DSF’s proposals represent a bold shift toward accountability and shared responsibility—a necessary step in navigating the complex path to a sustainable future.
