Shipping Decarbonisation: Financial and Business Strategies for UK Shipowners

Eleni I. Avaritsioti ()
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Eleni I. Avaritsioti: Faculty of Business, Entrepreneurship and Finance, Royal Docks School of Business and Law, University of East London, London E15 1NF, UK

JRFM, 2025, vol. 18, issue 7, 1-31

Abstract: The maritime sector faces urgent decarbonisation pressures due to regulatory instruments, such as the International Maritime Organization’s (IMO) Carbon Intensity Indicator (CII), which mandates reductions in greenhouse gas emissions per transport work. This paper investigates the challenge of identifying CII-compliant strategies that are also financially viable for UK shipowners. To address this, operational and technical data from UK-flagged vessels over 5000 GT are analysed using a capital budgeting framework. This includes scenario-based evaluation of speed reduction, payload limitation, and retrofitting with dual-fuel LNG and methanol engines. The analysis integrates carbon taxation, and pilot fuel use to assess impacts on emissions and profitability. The findings reveal that while the short-term operational measures examined offer modest gains, long-term compliance and financial performance are best achieved through targeted retrofitting supported by carbon taxes and favourable market conditions. The study provides actionable insights for shipowners and policymakers seeking to align commercial viability with regulatory obligations under the evolving CII framework.

Keywords: Carbon Intensity Indicator; environmental policy; sustainable shipping; maritime decarbonisation; alternative fuels; engine retrofit; carbon tax (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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