Kongsberg Maritime concept for a wind-assisted bulker. Image Credit: Kongsberg Maritime

For most of the past twenty years, efficiency in shipping has been treated as a matter of routine good practice. In pursuit of cost reductions, owners cut their fuel burn, trimmed for drag, and perhaps gained a percentage point from the hull or the propeller. It was useful but siloed, mainly oriented around cost control. However, this approach no longer fits the complexity facing the sector, nor the larger question now pressing on the industry: how to pay for decarbonisation. Efficiency is where a good deal of that money can come from.

The European Union’s Emissions Trading System brought shipping into carbon pricing in 2024. It has been expanded to cover all intra-EU emissions and half of the emissions on voyages in and out of EU ports. FuelEU Maritime runs in parallel, penalising fuels that miss a greenhouse gas intensity target that tightens with each compliance period.

Nor is that the whole regulatory picture. The IMO’s proposed Net-Zero Framework would apply similar logic to the global fleet: a worldwide fuel-intensity standard backed by emissions pricing, with ships that beat the target earning tradeable credits and those that fall short paying into a central IMO fund. Member states are due to vote on its adoption in some form in December 2026, and if it passes the rules could begin to take effect from 2028.

These regulations change the value of efficiency. Rather than just being oriented around cutting costs, it can now instead effectively ‘earn’ money - money that can fund the switch to new fuels and the technology that comes with it. Small optimisations, from hull coatings and propeller optimisation through to voyage routing, can now add up to savings large enough to help fund the wider energy transition.

Functionally, under EU ETS, every tonne of CO2 a vessel does not emit is an allowance the owner does not have to buy or surrender. Allowance prices have risen as the free allocation to shipping is phased out, so a container ship saving several thousand tonnes of CO2 a year avoids a large compliance cost before any fuel savings are considered.

Under FuelEU, vessels that beat the intensity target can pool their surplus with weaker vessels in the same fleet, and that surplus has a bankable value within their compliance accounts.

This changes the business case for efficiency investment, and many owners have yet to catch up. Payback sums from five years ago counted only fuel savings, and they now understate the return by a wide margin. Hull optimisation, wind assistance, propulsion upgrades, heat recovery and digital energy management each pay back in several ways at once: lower fuel costs, avoided ETS allowances, FuelEU surpluses, and, for fleets with verified data, premiums from charterers and green finance providers.

A Kongsberg Maritime study of a highly efficient Kamsarmax bulker shows this evolution in approach. The design pairs hull optimisation, a well-matched propulsion package and integrated energy management with wind assistance on long open-sea routes. Modelled against a conventional Kamsarmax on a similar trade, it cuts fuel use by more than 40 per cent, and by over half on the most wind-favourable routes. Under EU ETS and FuelEU, fuel savings account for only about half the value once compliance is included, and the vessel earns a surplus under pooling instead of paying a deficit.

In other words, owners who still judge efficiency on fuel cost alone are underestimating the return. A project that looked like a seven-year payback in 2021 could instead be a three-year payback in 2026, before any premium from a greener charter rate or better finance terms is realised.

One objection is that carbon prices are volatile, so banking on future compliance savings is risky. The caution is fair, but there are two important counterpoints. First, EU carbon prices have risen as the free allowance is withdrawn. Second, even on a modest price, the saving from lower fuel burn over a working life of two or three decades outweighs the risk of a weaker carbon market. Waiting for price certainty before investing means waiting for something that will never come.

Efficiency is also the one decarbonisation measure that works on a fuel agnostic basis. Whether the ships of the future run on methanol, ammonia, bio-LNG, hydrogen derivatives or, as is likely, some mix of all of them – a vessel that needs less energy will be cheaper to run. With rules still being written and the future remaining uncertain, that flexibility is worth a great deal.

At present, decarbonisation is as much a balance-sheet problem as an engineering one. Efficiency is the most practical lever owners have, and the owners that combine small gains, prove them with verified data, and put the savings back into the transition will be able to fund their way through the next decade.