Matthieu de Tugny, executive vice president at Bureau Veritas, has a new book out called Toward a sustainable blue economy, which addresses the complex challenges that the industry currently faces in its pursuit of more sustainable operations, whilst also looking at the need for industry-wide transformation in how we finance, fuel and operate the global fleet. Today, he writes exclusively for Splash.

Today’s maritime industry faces unprecedented uncertainty as it navigates geopolitical tensions, shifting trade dynamics, and a rapidly evolving regulatory landscape. However, whilst managing these competing challenges, shipping must not lose sight of its responsibility to protect the world’s oceans, its resources and the planet it sustains. 

As the world’s largest and most vital mode of trade, shipping sits at the heart of the ocean economy, a large and fast-growing economic sector with significant untapped potential. But if we are to ensure the future health and prosperity of our industry at the same time as protecting the marine environment and responsibly growing the wider ocean economy, it is vital that shipping challenges the deeply conservative financial frameworks that underpin it.

The ocean economy is estimated to be worth $2.2trn annually, encompassing everything from global trade to tourism, fisheries and offshore energy. Marine-based activity has outpaced global GDP growth for decades, and shipping, in particular, has experienced a period of sustained growth in recent years. In 2023, over 12bn tonnes of cargo were transported by sea, 2.6 times the volume shipped in 1995.

But while this economic expansion represents a positive signal of the industry’s resilience, the environmental cost is undeniable. Over 90% of the global fleet still runs on polluting fuel oil, and decarbonising the industry will cost between $8 and $28 billion annually, with the price tag for infrastructure upgrades potentially reaching $90bn. 

These are daunting figures for owners navigating uncertain fuel availability, evolving regulations, and variable demand. Furthermore, the industry is having to contend with a rapidly aging global fleet that will see approximately 15,000 vessels reach the end of their economic life within the next 10 years. In light of shipping’s growing capital needs as a result of these challenges, it is essential that the industry invests in “green ships” that are fit to support a decarbonized shipping sector.

In order to fund this imbalance, the industry could embrace a shift to green financing models that indelibly link capital with climate performance. This concept is not new. In 2019, a collective of global shipping financial institutions and industry organizations launched the Posidon Principles, a global framework to ensure continued alignment of shipping portfolios with global climate goals, and which represents over $240bn in today’s global shipping finance.   

From a public finance perspective, regional bodies – such as the EU Innovation Fund – are investing significantly in green fuels and zero-emission vessel pilots, as well as bunkering infrastructure to support the industry in managing its green transition.

Shipping’s complex operational landscape also provides a significant opportunity to double down on the progress that has been made in elevating the role of green financing by departing from its traditional conservative financial models that prioritize short-term cost efficiency, in favour of investment that is directly tied to achieving long-term environmental gain. In a decarbonized world, financing mechanisms must evolve to facilitate the green transition but they also have to find a way to incentivize all stakeholders and requirements. 

As the sustainable finance landscape evolves, financial institutions must also adjust their sentiment to maritime investment markets in order to consider evolving regulatory frameworks and address the value chains and industry levers that will ultimately drive sustainable finance. Only then will the industry be in a position to correct the current imbalance between economic growth and environmental stewardship. 

A sustainable blue economy isn’t a distant vision; it’s an urgent necessity. However, in order to achieve this collective goal, the maritime industry must reimagine the interconnected systems, processes and practices that have remained unchanged for decades.