What regulations are pushing shipping to cut emissions?

Two regulatory tracks are pushing shipping to cut emissions: the International Maritime Organization's global GHG strategy, and the European Union's regional rules, chiefly the EU Emissions Trading System and FuelEU Maritime. Companies like Voltic, which has patented an electric retrofit system for existing cargo ships, sit downstream of both, since either track raises the cost of continuing to run on conventional fuel.

The IMO's 2023 GHG Strategy sets a goal of net-zero emissions from international shipping by or around 2050, with interim checkpoints of at least a 20 percent reduction by 2030 and at least 70 percent by 2040, both measured against a 2008 baseline. The strategy also anticipates that about 64 percent of the total CO2 reduction needed by 2050 will come from alternative low- or zero-carbon fuels and energy sources, according to the IMO.

The EU has moved faster than the IMO on binding rules. Since January 2024, the EU Emissions Trading System has covered CO2 emissions from ships of 5,000 gross tonnage and above calling at EU and EEA ports, phased in at 40 percent of verified emissions in 2024, 70 percent in 2025, and 100 percent from 2026, per the European Commission and DNV. Shipping companies operating in EU waters must buy and surrender allowances for those emissions.

FuelEU Maritime, in force since January 2025, sets a separate requirement on the greenhouse gas intensity of the energy used on ships calling at EU ports, starting with a 2 percent reduction against a 2020 baseline and rising over time, according to the European Commission.

Together, these rules raise the operating cost of conventional fuel for any ship calling at EU ports, which is the direct financial pressure behind the industry's shift toward alternative fuels and electrification.