Shipping's oil era is coming to an end | The Business Standard
Skip to main content
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
The Business Standard

Sunday
June 15, 2025

Sign In
Subscribe
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
SUNDAY, JUNE 15, 2025
Shipping's oil era is coming to an end

Panorama

David Fickling, Bloomberg
23 December, 2022, 11:15 am
Last modified: 23 December, 2022, 11:21 am

Related News

  • Oil jumps on Israel-Iran tensions – will Bangladesh's energy and exports suffer?
  • Oil gains while markets assess US-China trade talks outcome
  • Bangladesh ready to buy more US cotton, oil to reduce trade gap: Yunus
  • Trump threatens sanctions against buyers of Iranian oil after US-Iran nuclear talks are postponed
  • National Action Plan to boost shipping sector competitiveness: Sakhawat

Shipping's oil era is coming to an end

It’s a good start, but it’s not the holy grail of decarbonization. That would entail plugging the industry into the emerging hydrogen economy

David Fickling, Bloomberg
23 December, 2022, 11:15 am
Last modified: 23 December, 2022, 11:21 am
Sketch: TBS
Sketch: TBS

For a century, the world's oceangoing fleet has been powered by crude oil. The 50,000 ships ploughing the high seas consume more than five million barrels every day, not much less than all the aircraft in the sky. One-twentieth of all oil ends up burned in a ship engine. Those days may soon be ending.

That's because the world's merchant ships are about to undergo the most profound revolution they've seen since the dying days of coal-powered steamships. Rules being quietly hammered out by the International Maritime Organization or IMO (the United Nations body that regulates shipping) are about to change the industry beyond measure.

It would be nice to be able to report this as a victory for climate. New energy technologies for power stations and vehicle engines are the biggest drivers of decarbonization in the world today. That doesn't look like it's happening in shipping just yet. Even so, we might be approaching a tipping point.

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

After decades of resistance, the IMO is finally implementing measures to reduce shipping's carbon footprint. It wants to cut emissions intensity to 40% below 2008 levels by the end of this decade, with total carbon pollution by 2050 falling to half of 2008's levels. From the start of 2023, all ships will have to report their emissions and submit plans to improve if they're underperforming.

That sounds like good news, but the shipping industry is notoriously conservative and the IMO tends to be dominated by the industry it regulates. The regulations at present are largely voluntary and in line with what shipowners are already doing for cost-management purposes. Some of the biggest contributions will come from simple measures such as slowing the speed of ships on the open ocean and cleaning their hulls more regularly, rather than any revolution in the way ships are fueled.

Even so, the fueling of ships is going through a revolution — or rather, multiple overlapping ones. Three years ago, almost all were powered by heavy fuel oil or HFO, a sludgy refinery byproduct that often costs as much as a third less than crude.

HFO is cheap, but it's nasty, too, with heavy sulphur content that is damaging to the environment. At the start of 2020, the IMO tightened its rules on sulphur emissions, causing any ship that couldn't install pollution-control devices to switch overnight to cleaner diesel.

It's possible that many of the broader problems in the oil market to this date can be traced back to that decision. It immediately added more than one million daily barrels of diesel demand in a market that typically churns out about 27 million barrels a day, and it has often been irrepressible diesel demand pulling up prices for crude over the past year.

As freight rates have returned to something like normality in recent months and fuel costs rather than port bottlenecks have resumed their role as the main headache for cargo lines, the spread between high-sulphur fuel oil and low-sulphur diesel has widened drastically. Diesel now costs more than twice as much as HFO.

Faced with soaring costs to power their fleets, shipowners are rapidly switching to alternatives. So far, the winner has been LNG, which typically delivers its energy at a cheaper price than diesel but was almost unknown as a marine fuel a few years ago.

Some 98% of car carriers on order are now LNG-powered, along with 49% of cruise ships, 32% of bulk carriers, 28% of tankers and 26% of container ships, according to a study in 2021 by TotalEnergies SA. Of new ships ordered this year, 444 — 63% of the total by tonnage — have been alternative fuel-powered, according to shipping data service Clarksons.

LNG's dominance isn't a huge win in emissions terms. While its carbon footprint is better than crude-oil products, that performance can deteriorate a lot if gas escapes without being combusted — a substantial problem with most marine engines. But the rising cost of diesel is making other fuels more attractive, too. Methanol made from natural gas and a 30-70 mix of biofuel and diesel are already competitive with the price of low-sulphur fuel oil, according to an October presentation given to the IMO.

All of that is going to start chipping away at shipping's share of oil demand — but the holy grail for decarbonization efforts is to plug the industry into the emerging hydrogen economy. A ship powered with hydrogen or its more easily stored compound, ammonia, could be more or less zero-carbon if the fuel was produced with renewable electricity. The costs for that would be several times higher than even the diesel being used at present, but there's already 136 ships in the order book that are designed to be switched to ammonia or hydrogen when those fuels become available.

The cartel-like nature of the shipping industry and regulatory capture at the IMO may help, rather than hinder, that process. Fuel is ultimately paid for not by shipowners but their customers, and ocean freight is so cheap — on the order of 10 cents or so per kilo — that most of us would barely notice the switch, especially when compared to the 10-fold increase in costs we went through over the past year.

By using the IMO to enforce some unity on the market and punish free riders, the ship owners with the largest fleets stand a good chance of passing those costs on, helping to further entrench their positions. AP Møller–Mærsk A/S, the biggest container line, is staying aloof from the shift to LNG-fueled ships, wagering the industry will end up shifting straight to zero-carbon fuels. In May, the IMO reached a consensus on including a carbon price in its coming suite of measures to reduce emissions.

The jury is still out on whether those moves can succeed in decarbonizing shipping. Either way, though, the oil era will soon be as dead as steam and sail. 


David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. 

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement 

 

Features

Shipping / Oil

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Representational image. File photo: TBS
    Chattogram Port proposes 70%-100% tariff hike
  • Benjamin Netanyahu in a video-message on 14 June. Photo: Collected
    Israel says attacks on Iran are nothing compared with what is coming
  • Police stand at a crime scene as they searched for a suspect posing as a police officer who shot two Democratic state lawmakers and their spouses in their homes, in the Minneapolis suburb of Champlin, Minnesota, U.S. June 14, 2025 in a still image from video. ABC Affiliate KTSP via REUTERS
    Manhunt underway after Minnesota lawmaker, her husband killed in 'politically motivated' attack

MOST VIEWED

  • Energy adviser Fouzul Kabir Khan with other government officials during a visit to Sylhet gas field on 13 June 2025. Photo: TBS
    I would disconnect gas supply to every home in Dhaka if I could: Energy adviser
  • Infographic: TBS
    Govt plans incentives for Bangladeshis bringing in foreign investment
  • Tour operator Borsha Islam. Photo: Collected
    ‘Tour Expert’ admin Borsha Islam arrested over Bandarban tourist deaths
  • BNP Acting Chairperson Tarique Rahman and Chief Adviser  Muhammad Yunus meet at Dorchester Hotel in London, UK on 13 June 2025. Photo: CA Press Wing
    National polls possible in 2nd week of February, agree Yunus, Tarique in 'historic' London meeting
  • Infographics: TBS
    220MW solar power plant planned in Feni
  • Rescuers work at the scene of a damaged building in the aftermath of Israeli strikes, in Tehran, Iran, June 13, 2025. Majid Asgaripour/WANA (West Asia News Agency) via REUTERS
    Tehran retaliates with 100 drones after Israel strikes Iran's nuclear facilities, kills military leaders

Related News

  • Oil jumps on Israel-Iran tensions – will Bangladesh's energy and exports suffer?
  • Oil gains while markets assess US-China trade talks outcome
  • Bangladesh ready to buy more US cotton, oil to reduce trade gap: Yunus
  • Trump threatens sanctions against buyers of Iranian oil after US-Iran nuclear talks are postponed
  • National Action Plan to boost shipping sector competitiveness: Sakhawat

Features

Photos: Collected

Kurtis that make a great office wear

1d | Mode
Among pet birds in the country, lovebirds are the most common, and they are also the most numerous in the haat. Photo: Junayet Rashel

Where feathers meet fortune: How a small pigeon stall became Dhaka’s premiere bird market

3d | Panorama
Illustration: Duniya Jahan/ TBS

Forget Katy Perry, here’s Bangladesh’s Ruthba Yasmin shooting for the moon

4d | Features
File photo of Eid holidaymakers returning to the capital from their country homes/Rajib Dhar

Dhaka: The city we never want to return to, but always do

5d | Features

More Videos from TBS

Which major powers align with whom in the Israel-Iran conflict?

Which major powers align with whom in the Israel-Iran conflict?

1h | Podcast
Israeli attack: Will Iran be inclined to develop nuclear weapons?

Israeli attack: Will Iran be inclined to develop nuclear weapons?

1h | Others
Why Did Israel Use Hellfire Missiles in the Iran Attack?

Why Did Israel Use Hellfire Missiles in the Iran Attack?

2h | Others
Beach Sand Tragedy: Negligence or Natural Disaster?

Beach Sand Tragedy: Negligence or Natural Disaster?

3h | TBS Stories
EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Advertisement
  • Privacy Policy
  • Comment Policy
Copyright © 2025
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net