World Bank Group has published a report assessing the potential of technical and operational energy efficiency measures in shipping.
As explained, to better understand the tapped or untapped potential of technical and operational energy efficiency measures for maritime transport, and how this can help reduce transport costs for developing countries in the energy transition, the “Keys to Energy-Efficient Shipping” report addresses four main questions:
What is the overall contribution of energy efficiency measures to meeting the IMO’s checkpoints and net-zero target on the path to 2050 for the global fleet and main ship types?
- What is the contribution of individual energy efficiency measures to cut GHG emissions, and how cost-effective are they?
- How can energy efficiency contribute to a cost-effective energy transition pathway, and how do they work in conjunction with the long-term fuel transition?
- What are the remaining barriers to maximizing energy efficiency in shipping, and what are the possible solutions?
Key findings
Following the quantitative and qualitative analysis, the report sets out four key findings for policymakers and industry to consider:
- Energy efficiency measures can reduce ship emissions by up to about 40 percent in 2030, exceeding the International Maritime Organization’s (IMO) policy objectives.
Technical and operational energy efficiency measures offer a maximum potential to reduce absolute GHG emissions by 23–39 percent in 2030 relative to 2008 levels, clearly exceeding the IMO’s base level of ambition of 20 percent in 2030 and at a maximum exceeding the IMO’s high-level ambition of 30 percent.
The largest untapped potential in the short term lies in ship speed reductions for the overall fleet, reducing GHG emissions by 5–15 percent, with additional savings achievable by optimizing voyage speed into congested ports. Beyond 2030, the contribution of technical measures, such as changes in ship design and the addition of new equipment, is expected to increase.
As the global fleet’s fuel transition to green fuels is still ramping up, energy efficiency improvements are promising short-term solutions. While energy efficiency measures are insufficient to meet the IMO’s 2050 target—at a maximum lowering GHG emissions to about 40 percent below 2008 levels—they will also complement the fuel transition beyond 2030 and reduce ships’ reliance on fossil fuel.
- About half of emissions savings from energy efficiency measures are considered cost-effective in 2030, cutting 250 million tons of emissions at no cost.
By 2030, cost-effective energy efficiency measures could fully pay for themselves by lowering shipping’s fuel costs. For bulk carriers, container ships, and tankers—which account for nearly 80 percent of shipping GHG emissions—the majority of energy efficiency measures are cost-effective. However, marginal abatement costs for individual measures vary by ship type, primarily due to differences in ship design and operational requirements.
Tankers have the least cost-effective abatement due to relatively higher installation costs of technologies and technical limitations when reducing speed. Bulk carriers offer favorable design features for wind-assisted propulsion, while container ships show high abatement effectiveness in reducing speed.
- Energy efficiency measures can reduce the total cost of the maritime energy transition by up to about $220 billion per year.
Improving the energy efficiency of the global merchant fleet is insufficient to meet the IMO’s policy objectives alone. Therefore, green fuels, such as methanol and ammonia, will be indispensable in 2040 and 2050 but are more expensive than conventional fuels. A cost-efficient route to meeting the sector’s GHG emissions targets is to prioritize energy efficiency, which reduces the fuel consumption of the fleet and, therefore, the overall cost of the transition. Annual capital investments in energy efficiency across the fleet of about $35 billion can save up to $270 billion in green fuel costs per year.
Investments in energy efficiency measures also offer mitigation to fuel price volatility and will be a critical component of the fuel transition when green fuels are still more expensive.
- Despite their potential, several top candidate energy efficiency measures in merchant shipping remain underused because of sector-specific economic, behavioral, and organizational barriers.
While promising, some of the candidate measures with the highest GHG emissions savings and lowest uptake—such as wind-assisted ship propulsion, air lubrication, and port call optimization (PCO)—remain untapped to date. An explanation for the lack of investment and implementation of cost-effective measures is due to known economic, behavioral, and organizational barriers, which are also common barriers to implementing energy efficiency improvements in other sectors.
Specifically, imperfect information, split incentives, and asymmetric information are the most significant market failures, while non-market failures such as access to capital, hidden costs, perceptions of technology risk, and market heterogeneity contribute to the lack of uptake of technical measures. Behavioral and organizational barriers are particularly important to address to increase the uptake of PCO by ports and the shipping industry.
Action points
Energy efficiency has significant potential for global shipping but remains largely untapped to date. While there are public- and private-led initiatives underway, significant barriers persist. How can the remaining barriers be addressed, and who is best placed to lead such efforts?
Policymakers
Regulatory bodies set the standards for the safety, security, and environmental performance of ships. They play a major role in creating an enabling environment for realizing the full potential of energy efficiency.
- Advance performance standards: Performance standards have been the backbone of a uniquely regulated global shipping sector. They hold some of the greatest potential to address longstanding market failures and barriers, such as information barriers, which prevent firms from responding only to price signals. International performance standards (for example, EEDI, CII) can be strengthened and considered by IMO member states in their future work plans.
- Explore alternative instruments: Other instruments (for example, emission levies, subsidies) can also provide additional demand- and supply-side incentives, especially as there is growing recognition that a combination of multiple climate policy instruments may be needed to decarbonize industries. The large untapped potential of energy efficiency, especially to help make shipping costs more resilient to absolute fuel price volatility, rerouting shocks, and fuel transition cost, presents an opportunity for national, regional, and international policymakers.
Industry
The shipping industry is both an enabler and beneficiary of increased energy efficiency. Actors range from shipowners and shippers to equipment manufacturers.
- Develop information standards: Alongside regulatory intervention, voluntary information standards can complement policies to help address imperfect information market failures and harmonize data exchange. Industry initiatives can help innovative technologies gain market acceptance. Validation guidelines for technology performance, and ultimately fuel savings, are important to grow investor confidence through consistent terminology (ITTC 2024).
- Foster demonstration projects: Third-party verified data on technology demonstrations in real operating conditions would also help improve access to capital and increase the business case for charterers and shipowners.
Ports and port community
Port stakeholders are critical actors to foster the uptake of promising port-centric energy efficiency measures, such as port call optimization, and infrastructure-related options such as onshore power supply.
- Explore national or local policies: National and local (port) policies can encourage these port development activities by considering how regulatory instruments can be used, as ports do not traditionally fall under the regulatory realm of the IMO.
- Share best practices: Learnings from ports that are more advanced in implementing port call optimization can help those at earlier stages of implementation to address adoption challenges. This is especially important for ports operating under a landlord model where private terminals control berth planning data.
- Adopt digital solutions: These initiatives can be supported by software systems such as port community systems or maritime single windows, which facilitate data sharing across multiple stakeholders. Adoption of global digital data standards that establish definitions of port locations and port call timestamps from universally accepted IMO and International Hydrographic Organization (IHO) standards is crucial to improve communication on port calls and arrival times between ship operators and ports, enabling port call optimization.
Finance
As uptake lags, access to capital is essential for financing investments in energy efficiency technologies and systems, both on board ships and at port facilities.
- Innovate products: To justify financing for energy efficiency upgrades, these technologies must demonstrate that they enhance the ship’s value—for example, by improving operating cash flow through reduced fuel costs or lower compliance expenses. To allow debt capital to support energy efficiency, ship financiers should collaborate with industry stakeholders to develop new financing solutions for retrofits to address risks in energy efficiency investments, such as when benefits do not fully accrue to the shipowner. Financiers can also collaborate with industry stakeholders to establish universally accepted information standards, which would help articulate the value of these technologies more clearly.
- Integrate financing: For port investments, implementing digital technologies to optimize port calls represents a cost-effective approach to achieving significant development outcomes. These interventions are often overlooked as standalone measures due to their seemingly modest scale, yet they can deliver substantial benefits. Development partners can collaborate with public port authorities to bundle smaller initiatives with broader trade facilitation and port infrastructure investments, ensuring that initiatives aimed at optimizing port calls are effectively implemented. This approach enables the sector to capitalize on efficient solutions and avoid missing valuable opportunities for improvement in air pollution management, GHG emission reductions, and enhanced trade efficiency.
