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About a fifth of the world’s oil and liquefied natural gas (LNG) passed through the strait of Hormuz, a strip of sea less than 30 miles wide at its narrowest point, before it was in effect closed by the US-Israeli attack on Iran, which sent the price of oil soaring and left an estimated 20,000 seafarers on 2,000 vessels stranded.
Their plight has shone a spotlight on the complex and dirty relationship between shipping and the fossil fuel industry. The sector is one of the most polluting, with most ship engines fuelled by what has been called the dregs of the oil refining process, heavy and carbon-intensive diesel too filthy for any other purpose. Shipping produces about 3% of global greenhouse gases, a portion set to rise as trade globalises further.
But the relationship with oil goes even deeper: not only are vessels dependent on “bunker fuel”, but shipping companies also rely heavily on fossil fuels as cargo. “About 40% of the global fleet is used to transport fossil fuels,” said Marie Fricaudet, of the shipping and oceans group at the Energy Institute, University College London. “[That’s] a trade that must be phased out to prevent the most severe impacts of climate change.”
At the International Maritime Organization (IMO) headquarters on the banks of the Thames in London, two weeks of talks among scores of governments focused on the means of decarbonising shipping are at their midpoint. Insiders have told the Guardian that many countries have been assailed by fierce pro-oil lobbying.
Liberia, Panama and Greece are among countries that appear to have shifted their position, switching from support for strict controls on greenhouse gas emissions to attempting to scrap new regulation.
If the world is to make the shift needed away from fossil fuels to a green economy, cleaning up shipping will be vital. But when so many shipping companies, and so many countries with big fleets, have a vested commercial interest in keeping the world hooked on oil, any attempts to green the fleet can quickly run aground.
LNG, trade in which has been severely disrupted by the closure of Hormuz, is one of the most costly fuels to move. It must be stored in specially cooled containers and transported in some of the most expensive vessels around. Companies and countries have invested heavily in these, partly in response to the last oil crisis sparked in 2022 by Russia’s invasion of Ukraine, when European countries and others began to look for other sources of gas. Before that, LNG was benefiting from the move away from coal.
But repeated oil crises have prompted many countries to consider renewables as a better bet for long-term energy security. Though in the near term “there are plenty of economies with a high dependency on gas”, one person involved in the IMO talks said, these factors mean LNG “is looking particularly dodgy in the midterm, the mid-2030s”.
Fricaudet agrees. “Among the vessels most exposed to this transition, LNG tankers stand out: they represent a relatively new and capital-heavy segment, typically have long operational lifespans, and are expected to face oversupply under most 1.5C and 2C climate scenarios,” she said.
Tristan Smith, a professor of energy and transport at UCL, points to the influence of LNG interests. “The future demand for moving LNG between continents, and those invested in owning and financing ships and import/export terminals that enable this, appears to be significantly linked to pressure exerted on the IMO’s negotiations,” he said.
Several countries with strong national LNG interests disrupted the talks last year, chief among them the US, Saudi Arabia and Qatar, and they were joined in opposing key aspects of the carbon regulations by Liberia and the Marshall Islands, which through their national flag registries – systems by which shipowners can pay a fee to be registered in a certain country – are “strongly correlated with LNG exposure”, Smith said.
“The stance of this group of industry actors is markedly different from other actors in the shipping industry who are taking a much more progressive position in the discussion,” he said. “[This] raises significant risks for a fair, equitable and effective resolution of the current impasse in the IMO’s debates.”
The LNG industry shows no sign of slowing its demand for new vessels. According to the International Gas Union (IGU), there are just over 750 vessels delivering LNG globally, and nearly half as many – 337 new vessels – now on order.
Ella Minty, the director of communications at the IGU, said: “LNG will remain a critical fuel to meet global energy demand growth, particularly in the developing world, and the growth in vessels aligns with LNG expansion plans that have already reached final investment decision or are under construction.”
The IMO talks have been going on for well over a decade in various forms, but last April there was a breakthrough: countries finally agreed not only to push for decarbonisation of maritime trade, known as the “net zero framework”, but also to impose a new carbon levy on shipping, forcing companies to pay a small price per tonne of greenhouse gas emitted.
The levy would have helped fund countries to invest in greener fleets that use cleaner fuels, renewable energy or hydrogen, and could also have helped developing countries stricken by extreme weather. But no sooner had the agreement been reached than the US, which under Donald Trump rejects all climate action, began to intimidate countries into changing their minds.
By October, the tactics seemed to have worked. An interim meeting put the proposed levy on ice for a year. Since then, other countries have come forward with plans that would in effect scrap the IMO’s decarbonisation targets. No decision is likely to be made on the future of the levy until October.
A spokesperson for the International Chamber of Shipping said the industry supported the IMO’s plans to cut greenhouse gas emissions from shipping and was moving “at speed on decarbonisation, often outpacing regulatory requirements through significant investment in alternative fuels, new technologies and more efficient vessel designs”.
“However, achieving a successful global transition ultimately depends on decisions taken by member states at the IMO,” the spokesperson said. “Governments must provide the clear consistent international regulatory framework needed to support and accelerate the industry’s efforts.”
Civil society observers have told the Guardian that despite this pressure, many countries are holding firm, and they still appear to have a working majority. Delaine McCullough, the president of the Clean Shipping Coalition and Ocean Conservancy’s shipping programme director, said: “Although there are differences on some of the details, IMO member states worked constructively to seek resolutions. Member states must hold the line against those looking to once again disrupt and delay.”
Though some countries fear for their maritime industries, experts argue that the transition away from fossil fuels need not mean commercial disaster. Christiaan De Beukelaer, a senior lecturer in culture and climate at the University of Melbourne, points out that other cargoes are available. Coal cargoes can be replaced with other dry goods including grain, and liquids with alternatives.
“Even when we stop using fossil energy entirely, there will still be a need to transport energy across oceans, as liquid fuels made with renewable electricity will not always be produced where they are consumed,” he said.
If the global economy is to be decarbonised, sectors now reliant on oil and gas – such as transport, heating and heavy industry – will need to shift to electricity. That means vast new and continuing demand for solar panels, wind turbines, heat pumps, batteries and electric vehicles. A large proportion of these will need to travel by sea – though they will not need to go via the strait of Hormuz.
