Global Sustainability Agenda #55: The Five Decarbonization Levers for Logistics – Part 3 of 3

Global Sustainability Reality

‘A perfect storm’: How climate change made the LA wildfires more likely - and more deadly (Euro News)

3 reasons to fear humanity won’t reach net-zero emissions – and 4 reasons we might just do it (The Conversation)

Climate change worsened likelihood of California wildfires: Report (The Hill)

‘Doomsday Clock’ moves closer to midnight amid threats of climate change, nuclear war, pandemics, AI (AP News)

Global Sustainability Business Impact

Global Investment in the Energy Transition Exceeded $2 Trillion for the First Time in 2024, According to BloombergNEF Report (BloombergNEF)

Buzzword: ‘Simplification’ – Von der Leyen downsizes the Green Deal in the name of competitiveness (EU News)

Decarbonization-as-a-Service Market to Skyrocket at 97.1% CAGR, Reaching USD 19,960 Million by 2030 (Yahoo Finance)

Changing The Narrative From Decarbonization To Modernization (Forbes)

Supply Chain Leaders See Technology as Key to Growth (Logistics Business)

Red Sea Crisis Pushes Shipping Stores and Spares Costs Higher (GCaptain)

?2025 Energy and utilities trends: five key themes shaping the transition (Capgemini)

Clean energy and cooperation: the challenge of the future (Enel)

Oklahoma's oil fields could be key to remedy carbon emissions (The Oklahoman)

Brussels under pressure to curb green agenda in response to Trump (Financial Times)

?Can US oil afford to ‘drill, baby, drill’? (Financial Times)

?Spain, Morocco to launch Europe's first zero-emissions maritime green corridor (MSN)

Pennsylvania’s Path To Industrial Decarbonization: A Focus On Steel (Carbon Herald)

The German Strategy Transforming Global Supply Chains (Supply Chain Digital)

Navigating the green transition: Decarbonization, trade, and labor markets in MENA (World Bank)

The path forward

In the past two weeks, we have explored the role of three of the five decarbonization levers in assessing and achieving carbon reductions across the maritime supply chain: increasing capacity utilization, Freight Transport Demand and Freight Transport Split.

This week, we will explore the role of the last two decarbonization levers: Improving Energy Efficiency and Transitioning to Low-Carbon Energy.

As previously mentioned, the ‘five decarbonization levers’ framework refines the "Improve" category from the Avoid-Shift-Improve (ASI) framework—which categorizes measures into (i) reducing the demand for transport, (ii) shifting transport to lower-carbon modes, and (iii) improving the carbon efficiency of transport systems—by distinguishing between capacity utilization and energy efficiency.

Finally, we also discuss how maritime stakeholders can effectively leverage the combined potential of all five levers to align with economic needs and infrastructure availability, as well as the critical role of ports in collaborating with maritime supply chain decarbonization.

Improving Energy Efficiency

Energy efficiency serves as the fourth decarbonization lever. Various strategies for reducing energy consumption per nautical mile have been thoroughly analyzed. These strategies can generally be categorized into?technical and operational measures. Technical measures pertain to both the?initial ship design?and?subsequent retrofits?incorporating fuel-saving technologies. In contrast, operational measures focus on optimizing vessel performance and navigation practices.

The?IMO’s Fourth GHG Study (2020)?evaluated the potential emissions reductions and associated costs of?23 energy-saving technologies?alongside one operational adjustment—a 10% speed reduction compared to 2018 levels. Additionally, a broader set of operational strategies has been explored, including?weather routing, optimized vessel trim management, and Just-in-Time (JIT) arrival, which involves adjusting sailing speed to align with port schedules and minimize idle time. These measures collectively contribute to enhanced energy efficiency and lower carbon emissions in the maritime sector.

The IMO has established several regulatory measures to enhance energy efficiency and reduce GHG emissions from ships. These include the Energy Efficiency Design Index (EEDI), Ship Energy Efficiency Management Plan (SEEMP), Energy Efficiency Existing Ship Index (EEXI), and Carbon Intensity Indicator (CII).

Energy Efficiency Design Index (EEDI)

The EEDI ensures that new ships are designed with improved energy efficiency, requiring ships to achieve a minimum level of energy efficiency based on their design and intended operational profile, expressed in grams of CO? emitted per ton-mile. EEDI is mandatory for new ships, has been effective since 2013, and its standards have become progressively stricter over time, requiring new ships to improve energy efficiency by increasing percentages (e.g., Phase 3 requires a 30% reduction in CO? emissions per transport work for many ship types).

Ship Energy Efficiency Management Plan (SEEMP)

The SEEMP provides a framework for shipowners and operators to improve operational energy efficiency. It is mandatory for all ships above 400 gross tonnage (GT).

SEEMP is a ship-specific plan that includes best practices for fuel efficiency, speed optimization, weather routing, hull maintenance, and energy-saving technologies. Since 2023, SEEMP Part III requires a CII reduction plan, ensuring continuous improvement in operational efficiency.

Energy Efficiency Existing Ship Index (EEXI)

The EEXI establishes an energy efficiency benchmark for existing ships, similar to the EEDI but applied retrospectively. It is mandatory for existing ships above 400 GT (enforced from 2023). It evaluates a ship’s energy efficiency based on its design and propulsion system, requiring compliance with a minimum efficiency threshold.

Ships can improve compliance through technical modifications such as engine power limitations, hull optimization, or the adoption of energy-saving technologies.

Carbon Intensity Indicator (CII)

The CII regulates the operational carbon intensity of ships. It is mandatory for ships above 5,000 GT (enforced from 2023).

CII Measures CO? emissions per unit of transport work (e.g., grams of CO? per ton-mile) and assigns ships an annual rating from A (best) to E (worst). Ships rated D for three consecutive years or E for one year must submit corrective action plans to improve efficiency.

The CII requirements become increasingly stringent over time, pushing ships toward continuous improvement in carbon intensity reduction.

Key Differences & Relationship:

EEDI and EEXI focus on technical efficiency (ship design and modifications).

SEEMP and CII emphasize operational efficiency (how ships are managed and operated).

EEXI and CII apply to existing ships, while EEDI applies to new ships.

SEEMP links all by ensuring a structured plan for continuous energy efficiency improvements.

Together, these measures align with the IMO’s GHG reduction strategy, aiming for a 40% reduction in carbon intensity by 2030 and net-zero emissions by 2050.

Transitioning to Low Carbon Energy

Among the various decarbonization strategies, the transition to?renewable energy—the fifth lever—is receiving the most attention, as it is the only long-term solution enabling the shipping industry to achieve?carbon neutrality. Replacing the approximately?300 million tons of fossil fuel?currently consumed by the maritime sector with renewable alternatives would be a transformative shift.

After extensive research and debate, two?synthetic fuels—e-methanol and e-ammonia—have emerged as the primary candidates?for long-term low-carbon energy in shipping. Both fuels depend on the large-scale, cost-effective production of?green hydrogen generated through water electrolysis powered by low- or zero-carbon electricity.

According to the?International Renewable Energy Agency (IRENA, 2021),?renewable ammonia?is expected to play a leading role in maritime decarbonization, potentially comprising?43% of the sector’s energy mix by 2050. While?e-methanol?offers advantages such as lower toxicity, minimal engine modifications, and easier transport and storage, its production relies on?captured CO?, making its future availability and cost dependent on the development of?carbon removal technologies, which remain in the early stages of progress.

Regardless of which?e-fuel?becomes dominant,?wind-assisted ship propulsion (WASP)?presents a viable?low-carbon supplement?for a significant portion of the global fleet. However, in the near future, the transition from?fossil fuels to renewable energy?in shipping will continue to face?significant challenges?due to?high costs and the limited availability of low-carbon alternatives.

The Role of Ports in Maritime Decarbonization

Ports play a?pivotal role?in the transition to?low-carbon marine energy?by enabling the adoption of alternative fuels and reducing emissions from vessels and port operations. Their involvement is essential in several key areas:

1. Infrastructure for Low-Carbon Fuels: Ports must expand their infrastructure to?store and distribute?large volumes of alternative fuels such as green ammonia, e-methanol, and hydrogen. Estimates suggest that approximately?87% of the projected $1.4 to $1.9 trillion investment?required to transition global shipping to low-carbon fuels will be allocated to?land-based infrastructure and fuel production facilities, many of which will be located in or near ports.
2. Shore Power for Docked Vessels: Ports can significantly reduce maritime emissions by providing docked vessels with?low-carbon electricity, thereby limiting their reliance on onboard fossil-fueled generators. Studies indicate that?50%–60% of a port’s total carbon emissions?can originate from ships berthed or anchored nearby. Implementing?cold ironing?(shore power) solutions allows ships to run on?onshore electricity, with the effectiveness of emissions reductions depending on the?carbon intensity of the electricity source.
3. Local Renewable Energy Generation: Ports can enhance sustainability by?generating renewable electricity onsite?through technologies such as?solar panels, wind turbines, and hydro-turbines. This localized energy production can not only support port operations but also contribute to the availability of clean power for ships.
4. Transitioning Port Operations to Renewable Energy: Beyond supporting vessels, ports can further decarbonize by?shifting their own operations—including cargo handling, logistics, and transportation—away from fossil fuels and toward?renewable energy sources. This transition can be facilitated by adopting?electric or hydrogen-powered equipment, energy-efficient infrastructure, and digitalization to optimize resource consumption.

Policies and Regulatory Frameworks

Government intervention, primarily through?regulatory policies and market-based mechanisms, is becoming more pronounced in efforts to reduce maritime emissions. However, these measures require better global, regional, and national coordination to maximize effectiveness.

Given the?high degree of public ownership?in the?port and rail freight sectors, governments play a direct and influential role in decarbonization.

While regulatory frameworks will set the foundation,?the private sector?will bear much of the responsibility for meeting ambitious?carbon reduction targets. This includes key industry stakeholders such as?shipping companies, cargo owners, ports, port operators, logistics providers, freight forwarders, land-based transport operators, energy suppliers, and financial institutions. Achieving these goals will require?fundamental shifts in business practices?alongside a?significant transformation?of energy and transportation infrastructure.

The most?critical aspect?of this transformation will be the transition to?low-carbon energy sources?across?vessels, ports, and hinterland transport networks. According to estimates from the?International Maritime Organization (IMO) and the International Renewable Energy Agency (IRENA), nearly?two-thirds of the required CO? reductions in shipping by 2050?will result from adopting?renewable energy.

As regulatory frameworks evolve, aligning policies with industry commitments will accelerate this transition and ensure long-term sustainability in the maritime sector.

References:

IRENA (2021). A pathway to decarbonize the shipping sector by 2050. International Renewable Energy Agency

IMO (2020). Reducing GHG emissions from ships. Fourth GHG Study (2020).

Alamoush, A. S., ?l?er, A. I., & Ballini, F. (2022). Ports’ role in shipping decarbonisation: A common port incentive scheme for shipping greenhouse gas emissions reduction. Cleaner Logistics and Supply Chain, 3, 100021.

Jacob (2022). The shipping industry looks for green fuels.

Maritime Decarbonization: Practical Tools, Case Studies and Decarbonization Enablers 1st ed. 2023 Edition, by Mikael Lind (Editor), Wolfgang Lehmacher (Editor), Robert Ward (Editor)