Despite Trump’s pushback, the end of shipping fuelled by oil is inevitable: Here’s why

That’s because the decision-making that really matters is not at the International Maritime Organization’s (IMO) headquarters in London, where a 57-49 majority last week agreed to defer for 12 months a vote on a penalty of as much as $380 per metric tonne of carbon dioxide. Instead, it’s happening in shipyards and ports.

Conventional marine fuel oil consumes about 5% of the world’s crude, as much as all the aircraft in the skies. Right now, that trade is almost certainly entering a permanent decline. Argus, an energy data company, expects 7.1 million fewer tonnes of consumption in 2027 than this year. Nothing the US does will be able to change that. That derives from both short- and long-term factors. The IMO’s regulations are just one, and by no means the most important.

The most profound shift is probably what’s happening in the order books of the major shipowners. For a century, they’ve depended on sludgy crude-derived bunker fuels to power their fleets. That’s rapidly giving way to a wave of gas and lower-carbon alternatives. Measured by their power demands, about a third of the ships currently on order depend on liquefied natural gas (LNG), with another 18% using methanol and other alternative fuels, according to Ship & Bunker.

Conventional marine fuel oil, which until recently accounted for roughly 100% of the stocks held at major ports, has been hovering around 50% for several years. Some 1,794 alternative fuel vessels are already in operation, with another 1,544 on order, according to DNV, a fleet data company.

The ports themselves are starting to catch up. At Singapore, the world’s biggest refuelling terminal, the share of demand for conventional fuels has been dropping by about 1% a year for three years. At No. 2 Rotterdam, nearly 13% of the total last year was LNG, biofuel blends or clean methanol. Even traditional engines are sipping less crude as design improvements make them more efficient. Regional regulations like the EU’s FuelEU initiative, which comes into effect in May, are forcing shipowners to clean up their fleets even in the absence of global rules.

To that, add the chaotic effects of Trump’s trade wars. Marine fuel demand ultimately depends on the amount of freight moved by sea. The administration’s attempt to turn the world’s biggest consumer market, the US, into a hermit kingdom is sharply reducing that commerce.

Merchandise trade volumes will increase at a relatively healthy 2.4% this year, according to the World Trade Organization, as importers front-load their purchases to avoid impending tariffs—but they are projected to slow to 0.5% in 2026 as the effects of Trump’s levies take hold.

With the US behind tariff walls and growth lacklustre in Europe, intra-Asian commerce is increasingly the only place experiencing real growth. That shortens shipping distances, further crimping marine fuel demand. Any decline in attacks on Red Sea shipping by Yemen’s Houthis would reduce fuel consumption further, as freighters between Asia and Europe switch from the longer route around Africa to the shorter passage via the Suez Canal.

These factors won’t decarbonize shipping overnight, but that was never a likely outcome. The fundamental technological challenges in the way of a clean maritime industry are substantial. While LNG on paper offers carbon savings of about 20% over conventional fuel, a lot depends on how you account for the unburnt methane that escapes the engine. Even if the IMO’s carbon price had been adopted last week, non-fossil fuels wouldn’t be competitive on price until the middle of the next decade.

Even so, it’s impossible to miss the way the current moment resembles the 1860s, when the age of sail was at its peak despite coal-powered steamships plying the seas for nearly half a century. Then, as now, a superior technology was waiting in the wings but infrastructure had yet to catch up. Sailing ships could operate without the global network of coaling stations that was eventually built toward the end of the 19th century, before oil in its turn took over a few decades later.

Similarly, the world’s ports have trailed shipyards in building the LNG, methanol and ammonia storage facilities needed to take advantage of the new engines currently being installed.

A transition is inevitable, however. Like the wind-powered era that preceded it, the age of oil on the high seas is ending. Even the Trump administration’s war on climate action won’t be sufficient to put a gust back in its sails. ©Bloomberg

The author is a Bloomberg Opinion columnist covering climate change and energy.