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The journey to net zero in shipping: The current outlook

Written by

Mark Edmondson

Consultant Marine Underwriter, Chubb Overseas General



The shipping industry is responsible for 90% of world commerce, and current estimates place it as being responsible for 3% of worldwide greenhouse gases – approximately 710 million metric tonnes per annum. 1 The European Commission estimates that without intervention the latter figure could rise to 10-13% within a few decades. 2


Consequently, the shipping industry has faced pressure in recent years to address this by investigating ways to reduce emissions. This article will explore how the shipping industry is approaching the transition to net zero, the marine underwriting concerns provoked by the transition, and what Chubb’s Marine teams are doing to support their clients through this period. 


The challenges of decarbonisation in global shipping

Shipping, like many other industries, has confronted myriad challenges in the transition to net zero. This is due to a number of factors. For example, the international nature of shipping and its sheer scale make it difficult for the industry to make uniform, wholesale decarbonisation changes. Additionally, shipping companies have many interests to contend with, such as flag state, country of domicile, various regulatory bodies, charterers, and often a complex structure of beneficial owners and stakeholders. Should a shipping company decide to implement significant changes to their fleet to reduce carbon emissions, the lack of supporting infrastructure across the world – such as bunkering facilities for vessels using alternative fuels or access to specialist shipyards – may initially make it difficult to transition to some of the new fuels that are under consideration. Inevitably, research, development and deployment of new technology that addresses the demands of energy transition will be undertaken and introduced at a different pace across the industry. 


Although the shipping industry faces complex technical and operational challenges to transition to net zero, in July 2023 the International Maritime Organisation (IMO) set targets for the shipping industry to reduce greenhouse gas emissions to net zero by or around 2050, with progress milestones at 2030 and 2040. These targets have encouraged many shipping companies to increasingly engage with carbon-reducing technologies and make improvements to fuel consumption. Although progress is still in its infancy, R&D and subsequent investment decisions around alternative fuels are certainly beginning to accelerate, with the industry’s leading classification societies playing a major role.


The concerns surrounding new technologies and low carbon fuels in shipping

There are a variety of different fuel types, technological enhancements or operating methods that could reduce the carbon emissions produced by ships or improve their efficiency. Many companies are increasingly engaging with R&D and beginning to commission new tonnage with alternative fuel types. With some major owners placing significant orders during the past six months, consensus is now beginning to emerge as to which propulsion technologies are likely to be adopted across the sector.


According to Clarkson’s 2023 Shipbuilding Review 3 , alternative fuel-powered vessels represent 45% of the 2023 order book. Clarkson’s also estimate that 31% of vessels currently in commission will be Carbon Intensity Indicator (CII) rated D or E 4 , which in part illustrates the scale of the transition required within the industry.

Although methanol, ammonia and liquefied natural gas (LNG) are the three most popular types of alternative fuel propulsion ordered in 2023 according to DNV, inevitably the industry will deploy a mix of alternative fuel types that also includes biomass, hydrogen and wind. Each has specific bunkering, storage and conditions for use, which in many cases are quite different from other alternative fuels and traditional bunker fuels. Consequently, each fuel type will require unique skill sets and loss-control measures to enable effective deployment and management. The toxicity of ammonia, the poor energy density of hydrogen or the highly flammable nature of methanol are some of the new challenges faced by naval architects, marine engineers, classification societies, regulators, vessel operators and insurers alike. With relatively little industry experience in managing many of the bunker fuels in question, a challenge that many shipowners are facing is training their crews in the use of new fuel types to ensure safe and effective operation, particularly at a time when there is no conclusion as to which fuel types will be selected for long term use. A range of other incremental technical and operational innovations and modifications that are being considered to improve vessel fuel efficiency include enhanced weather routing, hull form modifications and propellor flow improvement, hull air lubrication systems and enhanced hull coatings that reduce skin friction.


The requirements for shipping to reduce carbon emissions has inevitably rekindled the debate on nuclear powered propulsion for commercial tonnage. There are currently over 160 – mainly naval – vessels powered by nuclear reactors, and while the technology is largely well-proven, concerns remain around regulation, security, ports of refuge, salvage response and the provision of insurance for nuclear powered vessels. 


A biproduct of the shipping industry’s pursuit of a reduced carbon footprint is that it is likely to encourage a continued increase in average vessel size in some sectors, which we have witnessed happening over the last two decades. The often-debated difficulties that are associated with salvage and casualty management of larger assets – which have been a growing concern for marine underwriters – may therefore become more acute. 


Chubb’s approach to low carbon shipping

With prescribed metrics now available such as vessel CII ratings, underwriters are able to monitor progress within their own portfolio along the path to net zero. Therefore, 

insurers are increasingly becoming an integral part of the transition to net zero shipping through the support they provide for clients who are addressing the requirements that are now in place.


However, any change in risk profile which occurs as a result of the introduction of new technology, including those that address enforced environmental considerations, precipitates a new risk landscape that is novel not only for shipping companies but for insurers, too. Many of the challenges discussed in this article may have a potential impact on claims costs. 


At Chubb, consistent with our well-established risk-based approach, we will work with clients and their intermediaries to support the transition towards net zero shipping. This includes understanding any exposures associated with prototypical and new technology, and deploying specific risk management in collaboration with clients where appropriate. This approach is not limited to the shipping industry, and is an example of our efforts to enable climate change progress across industries and communities, worldwide. 


Our marine underwriting team has also been addressing more immediate insurance requirements arising from the global energy transition, in particular the increasing demand to produce EVs. More specifically, Chubb has developed a bespoke cargo product for the transit of lithium-ion batteries , using a dedicated policy form and in house risk management. 



Albeit against a timeline of over two decades, shipping and its insurers will witness the most widespread and comprehensive introduction of new technology for many years. That transition to reduce emissions from shipping has begun and it is beginning to accelerate.


While we are seeing many significant orders for ammonia or methanol powered tonnage and some retrofitting of new propulsion systems including wind, many shipping companies continue to explore options around alternative, low carbon fuels or efficiency-improving technologies. Inevitably there will be a mix of alternative fuel types adopted by shipowners, and it’s not yet clear which of those options will be most commonly introduced. However, Chubb’s Underwriting, Claims and Transport Risk Management Teams are ready to support the shipping industry in its efforts towards a net zero future.







All content in this material is for general information purposes only. It does not constitute personal advice or a recommendation to any individual or business of any product or service. Please refer to the policy documentation issued for full terms and conditions of coverage.

Chubb European Group SE (CEG) is an undertaking governed by the provisions of the French insurance code with registration number 450 327 374 RCS Nanterre. Registered office: La Tour Carpe Diem, 31 Place des Corolles, Esplanade Nord, 92400 Courbevoie, France. CEG has fully paid share capital of €896,176,662. UK business address: 100 Leadenhall Street, London EC3A 3BP. Authorised and supervised by the French Prudential Supervision and Resolution Authority (4, Place de Budapest, CS 92459, 75436 PARIS CEDEX 09) and authorised and subject to limited regulation by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request.

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