INDUSTRY INSIGHTThought Leadership

IMO’s decarbonization efforts and their impact on the petrochemical industry

By Elshan Aliyev, Editor, and Alex Sands, Senior Editor, Argus

The revised greenhouse gas (GHG) emissions strategy adopted by the International Maritime Organization (IMO) in July 2023 has accentuated the urgency of the organization’s ambitious goals to reduce emissions from the shipping industry in the coming years. As a major user of shipping to transport feedstocks and products intra-regionally and globally, the petrochemical industry should be aware of the potential impact.

The IMO has set a target to cut GHG emissions by at least 20% and up to 30% by 2030, and by at least 70% and up to 80% by 2040 compared with 2008 levels. These interim targets are to ensure the fulfilment of the ultimate goal of reducing GHG emissions to net-zero by 2050.

The shipping industry’s decarbonization efforts face a number of significant issues that are yet to be resolved, including adopting a goal-based marine fuel standard for alternative fuels and a maritime GHG emissions pricing mechanism. The IMO aims to finalize these and other measures by 2025 and to start implementing them in 2027 at the earliest.

That will give the maritime industry three years at most before the strategy’s first significant checkpoint, meaning that actions may need to be taken sooner. In the short and medium term, the drive to reduce emissions may be met by increased use of alternative fuels, such as LNG, marine biodiesel and biomethanol, ahead of low-carbon methanol, ammonia and hydrogen becoming available.

The drive toward decarbonization in shipping could affect the petrochemical industry in a number of ways. The most obvious impact will be on freight costs for transporting raw materials or exporting chemicals or products, including polymers. Prices of low or zero carbon fuels could, at least initially, be significantly higher than those of traditional marine or bunker fuels, such as very low-sulphur fuel oil (VLSFO). As anyone working in the shipping industry will attest to, bunkers are one of the biggest costs for any shipping company.

Consequently, this cost burden may trickle down to consumers in the form of higher prices for goods transported by sea. This, in turn, may affect the pricing of petrochemical products, potentially impacting a wide range of industries that rely on these materials for manufacturing.

Another question is about the availability of alternative fuels for the shipping industry. Competition from other sectors — road transport, aviation, agriculture and fertilizer industries — may constrain the supply of such fuels to the shipping industry.

Shipping would require 30-40% of the estimated global supply of carbon-neutral fuels in 2030, according to DNV’s maritime forecast to 2050, the availability of which could still be limited while remaining expensive to produce.

Some in the industry raise questions about the impact of considering alternative fuels on a lifecycle-analysis (LCA) basis. The IMO’s decision to calculate emissions on an LCA — or ‘well-to-wake’ — assessment basis promotes the uptake of low-carbon alternative marine fuels such as biomethanol, blue and green methanol and ammonia.

As the availability of alternative marine fuels increases, prices may start to align more closely with conventional fuels. This would alleviate some of the cost pressures on the shipping industry and subsequently on the petrochemical sector. Achieving this equilibrium will require time and investment, which will also need to be repaid through higher pricing.

The adoption of methanol and LNG may be a promising pathway to a greener maritime sector, but doing so could have significant implications for the petrochemical industry.


Rapidly gaining traction in the marine sector, methanol is convenient to store and transport. Its biodegradability and low environmental toxicity add to its advantages. However, its energy density is low, at 50% of traditional fuel oils. Depending on how demand for bio, blue and green methanol grows in the marine and competing sectors, increased demand could strain its availability for the petrochemical industry. Methanol is a crucial raw material for various processes, including formaldehyde production. Significantly wider adoption of methanol as a marine fuel could potentially lead to its scarcity as a feedstock and to higher prices, as well as potential challenges in the supply chain. But it could also lead to increased investment in methanol production facilities, further stimulating growth in the sector.


LNG is another alternative marine fuel gaining momentum. Like methanol, LNG offers reduced emissions and increased energy efficiency. Its use as a marine fuel could also impact the petrochemical industry, particularly in terms of availability and pricing.

The ultimate impact of decarbonization efforts on shipping costs are difficult to forecast out to net zero in 2050, being dependent on rapidly changing supply and demand dynamics. But there appears little doubt that costs will increase significantly and become more volatile as the IMO interim deadlines come into view.