Cargo owners’ expectations will drive shipping’s decarbonization, according to industry opinion. Michael Parker, global head of shipping, logistics, and offshore at Citi, said the pace of the industry’s transition to greener fuels was no longer governed by the ship but by the cargo, and by the emissions created by the cargo when it was moved. The financial sector would be looking for certainty of cashflow, he said. “We’re not going to do decarbonization speculatively, like people love to do in shipping. This will be long-term and investible. It must be safe technically and reasonably safe financially, there clearly must be some risk.”

Speaking on the DNV Maritime Forecast to 2050 panel, he said that although the shipowner would retain an important role, that was only because the cargo owners were going to choose what ships they put their cargo on, and finance would choose what to finance by virtue of emissions, Scope III being the key one. Sveinung Oftedal, specialist director at the Norwegian Ministry of Climate and the Environment, said the industry was about to experience intense competition for energy, finance and the best minds. “With decarbonization, the shipping industry has placed itself where it can win that competition. I think the success of decarbonization in shipping relies on that factor.”

The panel noted that decarbonization would likely change the profile of the industry as consolidation brought together smaller and medium-sized players. “There is no God-given right to be a shipowner, whatever size you are,” said Mr Parker. “Many small shipping companies were big shipping companies at some point.” He believed the size issue was related to the huge amount of capital that would be needed to finance decarbonization, which will come from major companies and through governments. “There will be risks in this, and the financial sector will look for a return, and I’m afraid it’s not going to get a return from smaller shipowners, the economics won’t work.” The financiers would be concerned by Scope III emissions related to the cargo and where the cargo goes. “That’s what we will be measuring.”

The transition to new fuels would lead to a lot more consolidation, said Mr Parker, because of the scale of net zero and the new technologies required. Hapag-Lloyd chief executive Rolf Habben Jansen said there would still be a place for smaller players, even in the container shipping sector, if they were innovative and focused on a particular niche. “In the deep-sea market, I think it will be difficult for smaller players to survive if they want a global footprint,” he warned. Mr Oftedal said further regulations were needed to frame the decarbonization of shipping. “We need to invest in human capital, so the smartest minds concentrate on decarbonization and give them opportunity to do technology testing of new solutions. You also need access to finance and energy. Further regulations will be needed but the impetus must come from the industry itself.”

DNV Maritime president Knut Ørbeck-Nilssen said that six annual forecasts had shown that the real challenge was not around the shipboard technologies. These were likely to be available within three to eight years, depending on the type of fuel and segment, he said. The real challenge, he said, was availability of carbon neutral fuels, its distribution, and its availability in ports around the world. “That leaves me with one strong conclusion, maritime cannot resolve this issue alone. We will have to reach out to other industries, policy makers, and authorities in different geographies to get this going,” he said, adding production of carbon neutral fuels would take a great deal of investment. “Investment onboard will have to be taken by ship owners; investment onshore to produce the green energy cannot be made by maritime community. Shipping cannot decarbonize alone, it must be a team effort, and we must collaborate strongly across industries.”