The International Maritime Organization's (IMO) introduction of carbon neutrality regulations is taking longer than expected, yet investments in eco-friendly vessels within the global shipping industry continue to grow. Despite regulatory uncertainties, shipping companies are securing alternative fuel vessels, including liquefied natural gas (LNG) carriers, which is positively impacting the domestic shipbuilding sector.
According to industry sources, the IMO's Net-Zero Framework, aimed at decarbonizing the shipping industry, is facing delays in final adoption due to disagreements among member countries.
The Net-Zero Framework includes the first global carbon pricing system in maritime history, targeting net-zero emissions in shipping by 2050. The IMO anticipates that this system could generate up to $15 billion annually in carbon pricing revenue starting in 2030.
Initially, the IMO planned to implement a global fuel standard and carbon pricing system for reducing greenhouse gas emissions from ships. However, opposition from the United States and some oil-producing countries has prolonged discussions.
Nevertheless, the transition to eco-friendly fleets among shipping companies is accelerating. The European Union has begun applying its carbon emissions trading system (EU ETS) to the shipping sector this year, alongside the implementation of FuelEU Maritime, which requires reductions in the carbon intensity of ship fuels. Additionally, global shippers are increasingly demanding reductions in carbon emissions across their supply chains, heightening the need for shipping companies to respond.
In fact, the market is witnessing a surge in orders for alternative fuel vessels centered around LNG. According to DNV, the world's largest classification society, a total of 119 alternative fuel vessels were ordered globally from January to May this year, with LNG-powered ships accounting for over half of these orders at 60 vessels. In contrast, methanol, ethanol, and ammonia-powered vessels only totaled four each.
This trend is favorable for the domestic shipbuilding industry, as LNG carriers are recognized as a high-value ship type that requires advanced technology to store and transport liquefied natural gas at minus 163 degrees Celsius. The design of cargo holds, insulation technology, and ensuring operational stability necessitate a high level of expertise, creating significant barriers to entry in this market.
The three major South Korean shipbuilders—HD Korea Shipbuilding & Marine Engineering, Hanwha Ocean, and Samsung Heavy Industries—are maintaining a competitive edge in the global market, leveraging their extensive experience and capabilities in LNG ship construction. It is reported that global shipowners still prefer South Korean shipyards for their quality, delivery times, and operational reliability.
Recent order achievements are becoming evident. As of early June, South Korean shipbuilders secured 34 out of 53 LNG carriers ordered worldwide, maintaining their market leadership.
Moreover, the three major South Korean shipbuilders have reportedly already achieved over 60% of their order targets for the year. The increasing orders for LNG carriers, very large gas carriers (VLGCs), and dual-fuel vessels are driving this performance.
Industry insiders believe that the trend toward eco-friendly vessel transitions will continue regardless of the timing of the IMO regulations. One industry official stated, "While there may be some adjustments to the specifics of the IMO regulations, the overall direction toward decarbonization will not change. Demand for alternative fuel vessels, including LNG, is likely to persist, benefiting domestic shipbuilders with competitive technologies."
* This article has been translated by AI.
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