Climate transition planning for shipping and the maritime sector

A hard-to-abate sector

The maritime industry accounts for nearly three percent of global CO₂ emissions—more than the total emissions of many large nations. This makes the sector one of the biggest contributors to global warming, creating an urgent need for transformation.

Shipping is a unique sector, often cited as “hard-to-abate.” Some of the reasons include:

Energy Availability and Fuel Characteristics

Ships generally require a large amount of energy to operate. Fossil fuel oils solve this problem by being very energy-dense and reliable, while “alternative” or “green” fuels are generally less energy-dense. This reduces vessel endurance and cargo capacity and complicates retrofitting.
Infrastructure and availability

Shipping is part of a global infrastructure system. For a vessel to rely on alternative fuels, it must be made available in a sufficient number of ports for any given vessel to conduct its trade reliably.
Cost and risk

Alternative fuels are generally costly. This applies not only to fuel cost, but also vessel CAPEX, crew training and maintenance cost. There is also the added risk of alternative fuels being less reliable and less safe than conventional fuel, putting the vessel, cargo, and—most importantly—the crew at risk.

On top of this, ships have long lifespans of 15–30 years and are subject to local (country-level), regional (e.g., EU-level), and global (UN International Maritime Organization, IMO-level) regulations. Additionally, there is a need for acceptance from private companies such as class societies, insurance providers, financial institutions etc.

Morten Elvekrok

Manager | ESG Advisory & Assurance

KPMG i Norge

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Pressure for transition yields opportunities

Despite the above challenges, the transition pressure is mounting rapidly in shipping. This pressure stems from a combination of customer expectations, emissions taxes, and performance and reporting requirements. Traditionally, the IMO has set the standards, but in recent years the EU—through regulation such as CSRD (Corporate Sustainability Reporting Directive), EU ETS (Emissions Trading System), and FuelEU Maritime—has become an equally important driver of sustainable shipping.

The focus of these regulations includes finding alternatives to fossil fuels and improving energy efficiency in shipping operations. While we will not go into detail here, key features include the opportunity to pool vessels, bank or sell “excess compliance,” and, in the case of FuelEU Maritime, the need for a “penalty reset strategy” to minimize costs if ambitious sustainability targets are not met.

By successfully maneuvering these pressures, shipping companies may gain a competitive advantage over their peers in terms of both financial and reputational performance. To do this successfully over time requires a structured approach.

A structured approach to managing change

Companies within the scope of CSRD are required to report on their climate transition plans as part of the requirements set out in ESRS E1-1. The best transition plans, however, are not centered primarily around regulatory compliance. Transition plans are essential tools to help companies prioritize, structure, and plan their transformation journey and should be based on the principles of value creation and value protection.

Transition planning provides a strategic roadmap to identify solutions that minimize both economic and climate-related risks while also seizing the opportunities produced by change—preferably in a broader sense than just decarbonization. It allows you to set clear, actionable, and achievable sustainability goals, holistically evaluate alternative fuels and technologies, and ensure your company is prepared for what the future demands.

Climate transition is not just about regulatory compliance; it’s also about creating new opportunities for growth and sustainable competitiveness.

The typical steps in producing a climate transition plan

The typical stages of the decarbonization and transition planning journey, from baselining to transition plan disclosure can be summarized into five steps:

Understanding current state

GHG calculation and verification, climate and nature risk and opportunity assessment, stakeholder assessment, policy reviews, and clarity on boundaries of control and influence.
Design strategy

Strategic ambition and target setting, subject to feedback loops. Identification and prioritization of decarbonization levers. Financial and value creation analysis, assessing incentives, grants, and cost/benefit (e.g., GHG cost curves, Enova or other grants). Engagement strategy.
Design implementation & governance integration

Preparing and incorporating the transition plan for implementation into the wider business.
Transition plan implementation & transformation

Strategy implementation, including specific individual solutions (e.g., onboard carbon capture, rotor sails, etc., on specific vessels). Financing of necessary investments.
Monitoring & reporting

Disclosure of the transition plan and ambitions. Monitoring, communication, and iterative reviews and updates.

A priority for the maritime sector and shipping industry

By developing a transition plan, you set clear targets and explore actionable decarbonization alternatives—and how to implement them. Energy transition and the move to more sustainable fuels are central challenges, especially for the shipping industry. Over time, this will yield both economic and environmental benefits.

Get started on your transition planning journey

Developing a climate transition plan requires customization, timing, quantification, and compliance with regulatory requirements. We have the experts to help you address these challenges and guide maritime companies through the complexities of sustainability and strategic goalsetting.