Why Shipping Can't Easily Abandon Fossil Fuels — Even Though It's Starting To

Nearly 40% of all cargo moved by ship globally — about 4,500 million tons out of 11,000 million total — consists of fossil fuels: coal, oil, natural gas, and the chemicals made from them, according to Quartz. This creates a locking problem that defines the shipping industry. Ships move the world's fossil fuels while burning fossil fuels to do it. The two dependencies reinforce each other, making it harder for shipping to decarbonize than almost any other form of transport.

The energy picture is lopsided. IEA data shows that oil products have made up over 99% of the fuel used by international shipping historically. Even though fossil fuels represent only 40% of cargo tonnage, they account for about half of the energy used in shipping. That's because hauling bulk cargo and oil is energy-intensive. In 2023, international shipping consumed 4.2 million barrels of oil per day — up 5% from the year before, according to the IEA. The sector produced roughly 2% of global energy-related carbon emissions in 2022, a modest slice overall, but the shipping industry has very few alternatives ready to deploy.

The alternatives available today are sparse. Biofuels made up less than 0.5% of global maritime shipping fuel in 2022. Only 8% of the world's ships are even equipped to use alternative fuels, according to UNCTAD. Those two numbers together — less than 0.5% energy share and only 8% of ships capable — show that even vessels built or modified for alternatives are not yet using them at any real scale.

The Gap Between Today and Tomorrow

International energy agencies have mapped out what decarbonization would need to look like. The IEA projects that biofuels, hydrogen, and fuels derived from hydrogen could grow from less than 1% of combined shipping and aviation fuel today to roughly 15% by 2030 and 80% by 2050, according to a 2023 IEA report. The climb is steep. The growth from today to 2030 is not a smooth curve — it requires the shipping industry to deploy new vessels and fuel infrastructure at compounding rates that the current order books and refueling ports do not yet support.

Here's the important distinction: the 2030 target exists in a scenario where governments actually enforce net-zero commitments at full strength. Current policies and market conditions are unlikely to deliver that outcome on their own. The real question is whether regulations and investment will actually close that gap.

Near-term shipping demand adds another wrinkle. Ocean freight volumes are projected to decline about 6% in October 2025 compared to the same month in 2024, according to C.H. Robinson's October 2025 freight market update. When demand softens, shipping companies make less profit per voyage. Tighter margins historically mean less spending on new ships — including those equipped for alternative fuels. For a transition that depends on shipyards building new vessels at an accelerating pace, the timing is awkward.

What the Numbers Tell Us

The shipping industry's core challenge is this: global economies still burn enormous quantities of fossil fuels, so ships must move them. Ships burn fossil fuels because the alternatives remain expensive, the refueling infrastructure is scattered, and each technology option carries real drawbacks. Green ammonia, methanol, liquefied natural gas (LNG as a temporary step), and hydrogen all present trade-offs in how much energy they store per unit of weight, how safely they can be handled, or how mature their supply chains are. A ship ordered today will probably still be operating in 2050. Building new, cleaner vessels cannot by itself solve the problem by the time global net-zero targets arrive.

That 8% figure — the share of the world's shipping tonnage equipped for alternative fuels — may be the single most revealing number. It shows where the transition actually stands in physical terms: still in the early-adopter phase, nowhere near the tipping point where infrastructure investment becomes self-reinforcing and speeds up on its own. The personal computing industry showed a similar pattern in the mid-1980s, when software makers waited for more people to own computers while computer makers waited for more software to exist. Shipping faces the same chicken-and-egg problem, but with vastly larger capital requirements and government energy policies layered on top, which makes coordination far harder.

At the same time, the sector is not standing still. Regulatory pressure — chiefly the International Maritime Organization's updated climate strategy and the European Union's decision to include shipping in its Emissions Trading System starting in 2024 — is starting to put a price on carbon in ship operating costs in ways that did not exist five years ago. The key question for the next several years is whether that price signal will be large enough and arrive fast enough to change the investment decisions being made in shipyards right now.

The broader optimistic angle: shipping has successfully navigated large-scale fuel transitions before. The shift from coal to heavy fuel oil took decades and required regulation, but it happened. Regulatory pressure, combined with improving alternative-fuel technology and falling costs, can redirect capital at scale. Whether it happens fast enough is the real uncertainty.