The maritime sector plays a crucial role in global trade, transporting around 80% of international goods by volume.
However, this critical industry is also responsible for approximately 3% of global GHG emissions, making it a priority sector for decarbonization efforts worldwide (UNCTAD, 2025). To address these emissions, policymakers and industry stakeholders are increasingly relying on both compliance and voluntary carbon market (VCM) mechanisms. On the compliance side, regulatory frameworks such as the IMO’s GHG Strategy, the European Union Emissions Trading System (EU ETS) and FuelEU Maritime are establishing increasingly stringent decarbonization requirements for shipping companies. To illustrate, IMO adopted its revised GHG Strategy, which targets net-zero emissions from international shipping around 2050 (IMO, 2023). While these mechanisms are expected to play a central role in driving sector-wide decarbonization over the coming decades, they also increase the need for additional investment in low-carbon technologies and operational improvements.
This is where voluntary carbon markets may play a complementary role, as significant capital will be needed to deploy energy-efficiency technologies, retrofit existing vessels, and accelerate the adoption of low-carbon and zero-carbon fuels. In this context, VCM is increasingly being explored as a complementary financing mechanism to support emission-reduction projects that may otherwise struggle to secure investment.
Unlike many other sectors, shipping faces unique barriers to decarbonization. Vessels have long operational lifetimes, often exceeding 20 years, and fleet renewal requires significant capital investments. At the same time, there are several uncertainties regarding the infrastructure requirements and costs of alternative fuels such as green methanol, ammonia and hydrogen.
As a result, many shipowners continue to face difficult investment decisions. Although a variety of technologies and operational measures can reduce fuel consumption and emissions, the financial returns are not always sufficient to justify immediate implementation. Energy-efficiency retrofits, advanced propulsion technologies, hull modifications, and digital optimisation systems often require significant upfront investment while generating savings over extended periods.
This financing gap has created an opportunity for carbon finance to play a supporting role. By generating additional revenue streams through carbon credits, climate finance mechanisms can improve project economics and encourage earlier adoption of emission reduction measures. These credits are themselves a sellable asset: a shipowner can monetise verified reductions as a recurring revenue stream, turning efficiency and fuel investments into income rather than pure cost.
The economic rationale can be illustrated through a simple example. From a financial perspective, even conservative carbon market assumptions can translate into tangible value. A project selling carbon credits at $4 per tonne while incurring issuance costs of around $1 per tonne could realise approximately $3 per tonne in net revenue from verified emissions reductions. While this additional revenue may not be sufficient to fully finance major retrofit investments on its own, it can improve project economics, shorten payback periods and strengthen the business case for early adoption of decarbonization measures.
The commercial pull is hardening fast. From 2026, the EU Emissions Trading System covers 100% of in-scope shipping CO₂ emissions, and now methane and nitrous oxide too, while FuelEU Maritime penalises high-intensity fuels, and the IMO’s global levy (around $100/t, and materially higher for weaker compliance) begins in 2028. Cargo owners are also demanding verified Scope 3 reductions.
Supply, by contrast, has barely started. + (about 17 unique programmes), most still pre-issuance (roughly 10 listed and 7 design-stage), with only ~4 fully certified, while GS 442, GS 444 and Verra VM0053/VMR0010 have none essentially. Across the seven registries tracked by CarbonPlan’s OffsetsDB (2.1 billion credits issued to date), shipping is a negligible share, a wide-open, first-mover opportunity for owners who certify early.
Voluntary carbon markets have traditionally focused on sectors such as renewable energy, forestry, cookstoves and waste management. However, in recent years, growing attention has been directed toward hard-to-abate sectors, including maritime transport.
The main mechanism for developing a carbon project under the VCM is demonstrating measurable, additional, and verifiable emission reductions relative to a business-as-usual (BAU) scenario. Establishing robust baselines, demonstrating additionality and ensuring accurate monitoring, reporting, and verification (MRV) are the essential requirements for the environmental integrity of any planned shipping carbon projects.
The emission reductions achieved are then converted into carbon credits and sold to voluntary buyers seeking to compensate for their residual emissions. In that way, carbon finance can support the fleet owners by providing additional income linked to verified emissions reductions.
Within the shipping sector, several activities may present opportunities to generate carbon credits. These include vessel design improvements, propulsion system upgrades, machinery-related efficiency measures and operational interventions aimed at reducing fuel consumption and associated emissions.
Examples include, but are not limited to, hull and propeller optimisation, energy-saving devices, waste heat recovery systems, voyage optimisation technologies and hull coating solutions. In addition, projects involving the adoption of lower-carbon and alternative fuels, such as biofuels, green methanol, renewable ammonia and hydrogen, may also contribute to significant emission reductions and create opportunities for carbon finance.
As interest in carbon finance for maritime decarbonization continues to grow, several methodologies have been developed or are currently under development to quantify and verify emission reductions from shipping activities. These methodologies provide the framework for calculating emissions reductions, demonstrating additionality and issuing carbon credits for eligible projects.
Rather than detail each framework, the table below maps the four leading shipping methodologies to what they reward. Gold Standard’s GS 422 credits energy-efficiency retrofits; GS 442 covers lower-carbon and bio-marine fuels; the new GS 444 rewards methane-slip abatement in LNG and dual-fuel engine exhaust; and Verra’s VM0053 covers alternative low-carbon fuels such as green hydrogen, ammonia and e-fuels (with Verra VMR0010 addressing shore power at berth).
Interest in carbon finance within the shipping sector has been growing in parallel with evolving regulatory and market dynamics. The IMO’s net-zero ambition, the expansion of regional climate frameworks and increasing expectations from fleet owners and financial stakeholders are collectively strengthening the demand for credible decarbonization solutions. In this context, carbon finance is emerging as a potential enabler for investment in efficiency improvements, alternative fuels, and innovative maritime technologies.
At the same time, the market is still developing and faces several important challenges. The regulatory environment is not yet fully settled, particularly regarding how VCM will interact with emerging compliance systems in the maritime sector. Issues such as the risk of double counting, the definition of who owns emission reductions and how carbon credits may be used in future regulations all create uncertainty for market participants.
Despite this uncertainty, the overall direction remains positive.
Pressure from both regulation and the market is increasing, pushing the shipping sector to decarbonise more quickly. In this context, carbon finance is expected to become an increasingly important tool that complements regulatory efforts by helping to unlock private investment and accelerate the deployment of low-carbon technologies across the industry.
The decarbonization of the maritime sector will require a combination of regulatory action, technological innovation and substantial financial investment.
Rather than being positioned as secondary to compliance mechanisms, VCM can be seen as a complementary pillar alongside regulatory frameworks in driving maritime decarbonization.
While compliance systems provide the binding structure for emissions reductions, VCM can support this transition by mobilising additional private capital, improving the economic viability of early-stage mitigation measures and enabling faster deployment of innovative low-carbon technologies.
As methodologies mature and market frameworks continue to evolve, VCM is expected to become an increasingly valuable tool in supporting the maritime sector’s journey toward net-zero emissions.