At a glance
- PwC analysis shows that adopting low-carbon shipping fuels causes only a negligible increase in the costs that consumers pay for shipped goods.
- Shipping companies would have to switch to these fuels to comply with regulations set by the EU and new regulations being considered by the International Maritime Organization.
- At-scale adoption of low-carbon shipping fuels requires a coordinated effort by the entire industry ecosystem to provide infrastructure and fuels.
For shipping companies, emerging regulations at the global, regional, and national levels are making the transition towards sustainable fuels and technologies more important. The International Maritime Organization’s (IMO’s) Global Fuel Standard, for one, would mandate annual reductions in greenhouse gas (GHG) intensity, such that ships running entirely on heavy fuel oil could eventually pay US$380 per tonne of CO2 equivalent emitted. As a result, fuel costs would effectively increase 30% in 2030 and nearly double in 2035. The carbon penalties are intended, among other things, to be used to reward low-emissions shipping—creating financial incentives for companies to switch to sustainable fuels.
First movers might find that the economic obstacles along the path to low-carbon shipping are less formidable than expected. New estimates by PwC Germany and the University of Technology Sydney’s Institute for Sustainable Futures (UTS-ISF) show that the use of low-carbon shipping fuels will barely increase the prices of certain consumer goods. For a television, the extra cost could be 1.4%. For a pair of sneakers, it could be 0.3%.
The opportunity for shipping companies to make progress is considerable. The global commercial fleet transports 80% of global trade, but 95% of vessels still burn conventional fuel. Some larger shipping companies are already pressing ahead. They’re switching to lower-emissions fuel blends, launching ships that can run on either conventional or sustainable fuels, and placing bets on future fuels, including synthetic ammonia. They’re also shaping the future, engaging in the development of so-called green shipping corridors.
These moves aren’t just environmental gestures. They’re strategic plays for business advantage in a sustainable fuel ecosystem that is taking shape to slow the increase of damages from storms and other climate-related perils, which already affect shipping. Executives who understand these dynamics can better decide how they’ll strengthen their business by implementing sustainability measures.
How sustainable shipping fuels affect consumer prices
The transition to sustainable shipping fuels will change the cost profile of goods that travel by sea. Green fuels such as bio-methanol and e-methanol can cost two to three times as much as conventional marine fuels, even after fees for carbon emissions are accounted for. Vessels with dual-fuel methanol engines sell for 15 to 20% more than standard ships.
PwC Germany modelled the impact of these costs on consumer prices, based on 2030 forecasts for fuel costs (comparing 100% heavy fuel oil, or HFO, with 100% green fuel, based on an average of bio-methanol and e-methanol prices) and the IMO’s currently proposed CO₂ emissions fees. We found that the effect varied among categories of products and services. Our overall conclusion, though, is that the barriers to switching fuels may be less imposing than business leaders might think—and in some instances, they would be negligible.
High-value consumer products would rise only marginally in price if shipped on vessels running on sustainable fuels. The price of a television, for example, would rise 1.4%. Sneaker prices would go up 0.3%. Solar panel prices, however, would increase by 4.6%.
Automobiles shipped on a 100% green-fuelled pure car and truck carrier (PCTC) would experience negligible cost increases. For mid-priced vehicles, consumers could pay an extra 0.8%. In higher-priced segments such as luxury cars, sustainable shipping would add only 0.1% to the sale price.
Commodities shipped in bulk on 100% green-fuelled vessels would see slight price increases. Wheat prices would rise by 2.3%. For iron ore, the increase would amount to 4.9%.
Leisure cruises illustrate how a service sector might absorb green-fuel costs. PwC analysis suggests that running cruise ships on 100% green fuels would add around 19% to ticket prices, on average—making leisure cruises the most affected category we studied. The per-ticket increase is higher than the per-item increase for most shipped goods because there are fewer passengers on a cruise ship than goods on a cargo vessel. Still, for leisure cruises, the additional cost of green fuels could be distributed among cabin classes in a way that matches different passengers’ willingness to pay.
These findings suggest that companies having their products transported by sea could opt for green shipping without adding significantly to consumer prices. (Even without emissions charges at the levels proposed by the IMO, the price increase would be in the same order of magnitude.) Demand from shipping customers would, in turn, create a strong pull for the shipping industry to adopt sustainable fuels. Nevertheless, the transition away from traditional shipping fuels such as HFO would involve practical challenges for companies to navigate.
Shipping’s route to net zero
To explore the transition’s dynamics, PwC Germany worked with UTS-ISF to model potential pathways for technology, investment, energy use, and policy that would bring the shipping industry to net-zero emissions by 2050. These pathways, viewed together, mark the same general pattern as the net-zero pathways for many other industries, such as chemicals.
At first, shipping companies cut their use of conventional marine fuels by working on their efficiency. That approach creates tangible value through cost savings and requires no great changes to the energy system. However, it doesn’t take the industry much closer to net zero. To get all the way there, shipping companies would have to implement other changes: route optimisation, onboard carbon capture, or—currently most promising—replacement of conventional fuels with sustainable fuels.
Fuel efficiency: The first stage in shipping decarbonisation
Straightforward tweaks to ship operations can bring substantial cost savings and emissions reductions, and many are already in wide use. The practice of “slow steaming”—deliberately throttling down ships to cut fuel consumption—began to spread in 2008, in response to high fuel prices and overcapacity during the shipping crisis. This allowed the industry to boost its energy efficiency by 15 to 20% between 2008 and 2022. More recently, companies have been using AI to squeeze out more efficiency. Techniques include streamlining dockings and signalling declines in engine or hull performance so workers can make repairs.
Many shipping companies are upgrading vessels with equipment and technology that make each barrel of fuel go farther. More than 8,700 ships—about one-third of the global fleet, by tonnage—already sport some fuel-saving features. The modifications include low-friction hull coatings, bow-reshaping retrofits, and special propeller fins and ducts that streamline the flow of water. These can be added during routine dry dockings, at a modest capital cost. And according to International Energy Agency (IEA) estimates, they can deliver energy savings of 15%, or enough to lower a typical container ship’s annual operating expenses by $2 million to $5 million and its total cost of ownership by as much as 10%.
Trials of other technologies point towards further efficiency gains. Air lubrication systems that pump bubbles under ship hulls can reduce drag, cutting fuel consumption by 4 to 8%. Wind-assisted propulsion systems, such as rotor sails and towing kites, provide enough extra thrust to lower fuel use as much as 5%.
Alternative fuels: The key to full shipping decarbonisation
There are three main types of alternative shipping fuels: transitional fuels that can produce near-term emissions reductions, biofuels made from organic feedstocks, and synthetic fuels derived from compounds produced using renewable energy. The uptake of each type will depend on how quickly the underlying technologies advance and how quickly the industry installs bunkering infrastructure in key locations.
Scenarios based on global 2024 results from the One Earth Climate Model (OECM) show some possibilities. As the chart below indicates, for the shipping industry to reach net-zero emissions by 2050, biofuels would have to make up the majority of the industry’s fuel mix, and e-methanol would constitute a sizable share. But their relative significance varies widely across scenarios. The variability makes it important for organisations in the shipping ecosystem to seek alignment on goals and standards, as we discuss later.
Transitional fuels could help lower shipping emissions in the near term, while infrastructure and technology for other alternative fuels develop. Of these, liquefied natural gas (LNG) is the most commercially advanced. LNG results in 20 to 23% less “well-to-wake” CO2 (total emissions produced from extraction through combustion) than conventional fuels. However, LNG’s main component, methane, is a potent GHG. Preventing methane from escaping into the atmosphere is key to making sure that LNG delivers CO2 reductions.
Biofuels are derived from organic materials such as plant biomass and municipal solid waste. They produce 60 to 90% less CO2, on a well-to-wake basis, than conventional marine fuels. Biofuels also offer convenience: they work in existing marine engines with minimal modifications. Already, various biofuels, mainly fatty acid methyl esters (FAME) and hydrotreated vegetable oil (HVO), are being blended with conventional fuels or used in their pure form for pilot projects and short-sea shipping. A big challenge with biofuels, though, is availability. One analysis by DNV suggests that net-zero shipping would require a tenfold increase in the amount of biofuel produced for shipping by 2050. This achievement would depend on two things: a massive increase in biofuel production and allocating 20 to 50% of the global biofuel supply—estimated to reach 500–1,300 million tonnes of oil equivalent (Mtoe) in 2050—to the shipping sector.
Synthetic fuels emit almost no net carbon emissions because they are made from renewable compounds. One type, synthetic methanol, has distinct advantages as a marine fuel. It can go into many existing engines, and it can be stored using the methanol-bunkering infrastructure at certain ports. It can be made from biomass (resulting in bio-methanol) or from green hydrogen and captured CO2 (resulting in e-methanol). Then there’s synthetic ammonia. Made from green hydrogen and atmospheric nitrogen, it contains no carbon. However, ammonia is corrosive and toxic, and burning it can produce nitrogen oxides (NOx), an air pollutant. For these reasons, the OECM scenarios, shown above, limit synthetic ammonia to 3% of the shipping sector’s 2050 fuel mix.
The elements of a sustainable shipping ecosystem
Full decarbonisation of shipping, achieved through the transition to alternative fuels, has much in common with the transition from gas-powered vehicles to electric vehicles. It requires an entire ecosystem of businesses—suppliers, equipment manufacturers, infrastructure providers, policymakers, financial institutions, technology creators, customers—to converge on the same goals, at the same pace. Decarbonisation also opens countless possibilities for companies to create value in new ways. Below, we describe the major shifts entailed by the reconfiguration of shipping.
Policy: Accelerating decarbonisation
Regulations are already helping quicken the pace of decarbonisation in shipping. Two frameworks established by the European Commission are likely to make a strong impact. Since January 2024, the EU Emissions Trading System (ETS) has required shipping companies to purchase emissions allowances covering tank-to-wake CO₂ emissions within EU and European Economic Area (EEA) ports. The resulting costs provide an impetus for shipping companies to decarbonise. FuelEU Maritime, started in January 2025, complements the EU ETS by setting GHG intensity requirements for ships over 5,000 gross tonnage (GT), aiming for an 80% reduction by 2050. (Carbon costs set by these EU frameworks have been excluded from the modelling for this article to make the results globally comparable.)
At the global level, the IMO plans to set out two key measures as part of its Net-Zero Framework: a Global GHG Levy and a Global Fuel Standard. The Global GHG Levy would require shipowners to pay for each tonne of GHG emissions. The fees collected would support innovation, research, infrastructure, training, and technology transfer for the industry’s transition to net-zero emissions, as well as initiatives to support states that are vulnerable to climate risks. The Global Fuel Standard aims to promote the use of zero-emission fuels by gradually phasing in GHG intensity reductions. These measures—now scheduled to be considered in 2026, for adoption in a later year—would likely influence ship design, operational practices, and fuel choices worldwide.
Infrastructure: Preparing ports for sustainable shipping
The transition to alternative shipping fuels is also a matter of retooling ports with the proper storage and bunkering systems. Methanol can be stored at ambient temperatures, but it calls for rigorous safety protocols. Given its higher complexity, ammonia must be handled with great care, and also stored and dispensed in supercooled, corrosion-proof equipment.
The outlook for establishing the right bunkering systems is nevertheless promising. Some 120 ports, including large ones such as Rotterdam and Gothenburg, offer methanol bunkering now. Ammonia bunkering technology is advancing through pilot projects. In addition, more than 50 initiatives have sprung up to establish green shipping corridors. These multi-stakeholder efforts seek to standardise fuel types, port infrastructure, ship technologies, and routing strategies in ways that favour alternative fuels. The idea is that if shipping companies and port operators have more certainty about their future context, they can invest more confidently in new technology.
Finance: Funding the transition in shipping
Converting the world’s shipping fleet and port infrastructure to alternative fuels will be a capital-intensive undertaking. For financial institutions, that creates an opportunity. It starts with the outlays needed to retrofit or replace the 95% of commercial ships that now run on conventional fuels. Retrofitting one large container vessel to run on LNG costs approximately $35 million, according to Lloyd’s Register. DNV finds that methanol conversions cost about one-third as much.
In Europe, regulatory requirements oblige financial institutions to support the shipping sector’s transition, while favouring owners and operators that can demonstrate credible decarbonisation pathways, robust data, and effective management of EU ETS and FuelEU Maritime exposure. As these requirements take effect, shipping companies’ access to capital will increasingly depend on whether they deliver concrete emissions-reduction measures, transparent reporting, and aligned transition plans.
Technology: Enabling production of sustainable shipping fuels
To produce synthetic fuels for ships, energy companies must have large, reliable supplies of “green” CO₂ that has been pulled from the atmosphere or biogas plants. (Cycling this atmospheric CO₂ into synthetic fuel means the fuel emits no net carbon when it’s burned.) The average of scenarios based on global 2024 results from the OECM, developed in line with a 1.5°C warming pathway, suggests that making synthetic fuel for the maritime sector alone will require some 136 million tonnes of CO₂ per year in 2050.
That amount far exceeds what carbon-capture systems produce now. The IEA estimates that bioenergy with carbon capture and storage (BECCS) installations collect around 2 million tonnes of CO₂ annually, whereas direct air capture (DAC) systems collect just 10,000 tonnes per year. Accelerating the build-out of carbon capture will therefore be essential to decarbonising the shipping sector.
Next steps for shipping companies
Evolving regulations and technology advances are turning decarbonisation opportunities into business reality for shipping companies, putting real value into play. Although many stakeholders will have to work together to realise the industry’s net-zero ambitions, shipping companies can take several actions now to capture advantages while accelerating their own transition.
Build a comprehensive investment plan. Retrofitting and replacing vessel fleets to run on alternative fuels will require careful capital planning. Shipping companies will likely benefit from exploring all available financial incentives, such as government grants, tax credits and incentives, and green shipping funds. Blended finance mechanisms, which use public funds to de-risk investments made by private-sector institutions, can also help shipping companies close the investment gap. In forming capital plans, shipping companies must carefully choose which sort of alternative-fuel vessels to use, because the vessel’s aftermarket value will depend on the popularity of the chosen fuel type.
Explore product-aware pricing. The added cost of green shipping has varying implications for seaborne goods. Shipping companies can apply surcharges based on product type, volume, and value to allocate those costs in a way that their customers can bear, while maintaining the competitiveness of their shipping services. Dynamic freight pricing and voluntary “green shipping” premiums can give companies and customers additional flexibility in making the transition to sustainable shipping.
Enable transparency and consumer engagement. Another way to stoke demand for sustainable shipping is to turn it into a product feature that consumers want. Certification schemes, emissions labelling, and clear communication of cost impacts can help consumers appreciate the value of low-carbon transport. To implement such measures, many shipping companies will first need to earn consumer trust by improving their systems for tracking costs and emissions and providing clear information.
The eventual cost of sustainable shipping may look manageable for consumers. But getting the entire industry to decarbonise will be a challenge. The many stakeholders involved in the shipping ecosystem, as well as consumer-facing companies, retailers, and others that depend on ocean transport, must work together to make sure that technology moves forward, infrastructure develops, and capital flows in ways that support the economical use of alternative shipping fuels. As costs fall and standards are realigned, companies can realise financial value from their investments in low-carbon shipping solutions.
PwC authors
Socrates Leptos-Bourgi, International Shipping & Ports Leader, is a partner with PwC Greece.
Dirk Niemeier, Clean Hydrogen, CCUS, and Sustainable Fuels lead, is a director with PwC Strategy& Germany.
University of Technology Sydney authors
Maartje Feenstra, with a background in chemical engineering and chemistry, works at the University of Technology Sydney as a research principal at the Institute for Sustainable Futures.
Sven Teske, a professor at the University of Technology Sydney, leads the One Earth Climate Model research project at the Institute for Sustainable Futures.
The authors thank Ruben Dario Galvan, Ioannis Hatzilidis, Anica Moritz, Jürgen Peterseim, Dimitrios Sakipis, Burkhard Sommer, and Anselm von Urach for their contributions to this article.
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