Mounting Maritime Risk...Geopolitics, carbon rules & investment uncertainty

The shipping industry moves four-fifths of all global trade and is responsible for around 3% of global greenhouse gas emissions (GHG), which must be reduced by 50% by 2050 under the Paris Agreement.

But such a task is looking increasingly difficult as recent failures to vote through critical global emissions regulation, escalating conflicts and political / economic realities add pressure across the industry.

A recent study in Nature Communications Earth & Environment puts numbers to what many insiders already know, geopolitical instability is quietly sinking decarbonisation momentum.

The researchers found that rising political risk, from sanctions to armed conflict, can slash national willingness to cut maritime emissions by more than 14 %, and that sustained instability could delay the International Maritime Organization’s (IMO) 2050 net-zero target by half a century.

This target took a significant blow as the global emissions regulation, worked on for years, was sunk by the US after weeks of pressure on the IMO.

"That means the effort to set binding international rules to cut greenhouse gases from shipping, responsible for about 3 percent of global emissions, goes into the deep freeze for a year. During that time, the U.S. and other opponents can try to rally more support to kill it completely. " Politico

It all points towards a difficult future for the industry, void of guidance via clear regulation yet stifled by mounting global pressures, conflicts, trade wars, growing cyber threats and more.

And as new climate policies like the EU Emissions Trading System (ETS) take hold, the question becomes, not whether change will come, but who will pay for it and who will stand in its way...

In this feature, we'll highlight the numerous risks facing the shipping industry and assess the potential roadmap to decarbonisation, despite the challenges.

If you would like immediate regulatory support, pricing options for EU & UK ETS, access to biofuels or more information on any of our solutions, enter your details on the form, here.

Black swans rock the boat

Few sectors reflect global disorder as vividly as shipping.

COVID-19 revealed how a novel virus could bring ports, containers and worldwide supply chains to their knees.

Then came the Russia–Ukraine war, which redrew trade maps, rerouted tankers and sent fuel bills soaring. The impact of the conflict continues to disrupt the entire sector.

According to The United Nations Conference on Trade and Development (UNCTAD), average voyage distances have grown from 4,800 nautical miles in 2018 to over 5,200 by 2024, as ships sail longer detours to avoid conflict and sanctions, a shift that alone adds around 2–3 % to global maritime CO₂ emissions each year.

The Red Sea crisis has also highlighted that regional instability can ripple through the global economy. A full explainer of the impact on the shipping sector, can be found here.

IMF data show traffic through the Suez Canal dropped by half in early 2024, while voyages around the Cape of Good Hope surged 70%.

Each extra day at sea adds both cost and carbon.

A Cape detour for a typical container ship burns roughly 800 additional tonnes of fuel and emits nearly 2,500 tonnes of CO₂.

Multiply that by thousands of voyages, and a single chokepoint crisis can erase months of decarbonisation gains.

Once more, it's a clear reflection of the almost impossible task the shipping sector faces when attempting to decarbonise at scale.

Politics, protectionism and the pushback

The EU’s inclusion of shipping in its ETS this year marks a historic pivot toward carbon pricing.

But as we have seen by the sinking of the IMO carbon regulation, policy is not universally embraced. Despite it's clear long-term advantages for the industry and the planet.

Widespread reports have continued to show mounting resistance from major trading nations, including the United States, to new any new maritime climate measures, arguing they threaten competitiveness and undermine the IMO’s global mandate. 

The U.S. delegation has lobbied against stricter short-term targets, with some states warning that regional carbon schemes like the ETS and CBAM amount to “green protectionism.”

That resistance matters.

It limits international consensus, fragments regulation and clearly demonstrates, when politics splinters, climate progress slows.

As long as powerful economies hesitate, global shipping remains stuck between ambition and inertia.

Within the shipping industry, there is genuine appetite to drive decarbonisation and provide a clear roadmap for ship builders, ship buyers, fuel suppliers and traders yet the lack of strong regulation and low mandates for sustainable fuel production is leaving the sector in limbo.

Change, as we know, must come from the top, down.

The carbon compliance crunch

Under the EU ETS, all large vessels (over 5,000 GT) calling at European ports must now account for their verified emissions.

40% in 2024 rising to 100 % by 2027.

Operators must surrender EU Allowances (EUAs) for their CO₂ output and will soon need to include methane (CH₄) and nitrous oxide (NOₓ) from 2026.

The UK will follow with its own ETS from July 2026, initially covering domestic voyages but likely expanding to international routes.

This “cap-and-trade” architecture forces shipping into the carbon market proper.

And to add to the complexity, the maritime sector is entering at a time of high price volatility and complex contractual risk.

EUA prices have tripled since 2021, peaking above €100 per tonne in 2023, while UK Allowances (UKAs) trade with lower liquidity and wider spreads.

Each shipowner must now decide who is responsible for compliance: the owner, operator or charterer. And those who fail to surrender allowances face fines of €100 per tonne of CO₂ output, plus potential bans from EU ports.

The complexity of defining contractual responsibility across time-charters and joint ventures creates genuine financial exposure.

The key insight isn’t simply that carbon costs are rising, it’s that compliance has become an operational variable as fundamental as fuel or freight rates.

Whether the shipping sector at large, is prepared for this new paradigm, is another question entirely.

A release valve for the carbon market

For this particular challenge, however, there is a solution.

Creating a carefully planned carbon compliance strategy that mitigates risk and ensures long-term security at the lowest cost possible.

By taking a serious approach to your carbon compliance strategy, and investing in allowances at the right time, your organisation could save millions.

(If you want immediate support, get in touch with our award-winning carbon compliance team, here.)

As ETS2 and new regulations come into view, such as CBAM, an increasing spectrum of industries will be impacted by carbon taxes.

Once your business is under the umbrella of such regulation, you will be forced to comply or face significant fines. 

CFP Energy offers warehousing and delivery of EUAs for clients even without registry accounts, effectively acting as a “pressure valve” for operators navigating new rules.

Our modelling show allowance costs trending upwards through 2030 as free allocations are phased out and maritime demand increases.

For shipping companies, learning to manage that exposure, purchasing allowances strategically, integrating cost-pass-through clauses, or hedging future EUA/UKA prices, will determine profitability as much as fuel efficiency ever did.

Beyond compliance, CFP Energy also provides creative solutions to help large-scale organisations navigate the energy transition.

From voluntary carbon offsets, biofuels, CBAM support, cyber security and global carbon compliance support, there are immediate solutions available.

This is nuance often missing from mainstream coverage of the carbon market in particular.

It shouldn't be treated as a burden left to the last minute, it’s a fundamental tool for navigating the energy transition itself and potentially getting a competitive edge over competitors paying less attention to carbon markets.

To get ahead of the carbon compliance waves heading your way, get in touch with our team, here.

The shipyard stalemate

While regulators and traders are finding ways to adapt and position themselves for change in the shipping industry, shipbuilders and ship brokers are in a more difficult position.

Investing and launching a state-of-the art vessel represents a 25-year bet on fuel technology that barely exists today, however, that hasn't stopped some operators preparing.

Orders for methanol and ammonia-ready ships are growing and Maersk alone has more than 20 on order. The issue is the supporting bunkering network lags far behind and just as investments are required to modernise national grids, it's critical that renewable fuel infrastructure is developed to support the ships of the future.

Without global mandates and international collaboration, it will be impossible for vessels to move from port to port. 

Once more, the industry attempted to drive change and reach an agreement but political pressure ended the talks.

 The IMO’s failure to pass tougher interim emissions reforms only deepens the uncertainty for the industry and the ship building side of the sector. 

The result is global fleets being left in limbo and financial planners unsure of the future.

Ultimately, instability erodes ambition and in the shipyard, that means fewer green orders and more retrofits.

The longer the policy fog persists, the harder it becomes to hit 2050 targets without scrapping vessels early, a cost that could run into hundreds of billions.

Cyber security’s rising tide

Beyond the visible challenges on the high seas, a quieter threat is rising below the surface,  cyber insecurity.

As shipping rapidly digitalises, from autonomous navigation systems to electronic bills of lading, it has become an increasingly attractive target for cyberattacks.

In today’s world, keeping trade routes “safe” no longer just means guarding against pirates or missiles...it also means defending against malware, ransomware and data breaches.

The maritime sector has historically lagged behind other critical industries in cyber defence, but incidents are accelerating fast.

In 2023 alone, researchers recorded at least 64 cyberattacks across shipowners, ports and marine suppliers, with many more likely going unreported.

These ranged from ransomware crippling port terminals to breaches of ship management software.

One of the most disruptive incidents came in January 2023, when a ransomware attack on DNV’s ShipManager platform forced systems offline and disrupted operations on around 1,000 vessels worldwide.

The Port of Lisbon was similarly hit by a LockBit ransomware attack in late 2022, halting operations for four days and triggering a $1.5m ransom demand.

The lesson is clear.  Vulnerability extends across the entire maritime ecosystem.

What makes the current moment more dangerous is the emergence of AI-driven cyber threats.

The UK’s National Cyber Security Centre has warned that artificial intelligence will significantly accelerate cyber intrusions, allowing attackers to penetrate systems and extract data at unprecedented speed.

Officials speaking at CyberUK 2025 highlighted four major risks to sectors like shipping.

Faster AI-enabled attacks.

A widening gap between organisations with strong defences and those without.

Growing exposure from aging digital infrastructure.

The prospect of weaponised AI capable of disrupting navigation or port operations.

In short, an under-protected industry is colliding with increasingly sophisticated tools.

Modern ships and ports are now data-dense environments. Vessel telemetry, cargo data, port schedules and supply-chain records have become strategic assets.

A well-timed cyberattack can shut down terminals, delay cargo flows or even compromise vessel safety. The NotPetya attack on Maersk in 2017, which cost the company an estimated $300m, remains a warning of how quickly digital incidents can escalate into global trade disruption.

Yet many shipowners still report limited cybersecurity training and underinvestment in IT systems, even as always-connected vessels and onboard IoT devices expand the attack surface.

The consequences of a major cyber incident could be severe.

Legal experts have warned that a successful attack on a vessel or major port could trigger disruption comparable to large-scale infrastructure failures, with knock-on effects across global supply chains.

NATO has also flagged maritime cyber threats as a strategic concern, given that ports handle around 80% of global trade and play a critical role in military logistics.

Cybersecurity has therefore become a material destabilising factor for the shipping sector, capable of compounding geopolitical, regulatory and operational risks.

Addressing it requires elevating cyber resilience from a technical issue to a board-level priority. Regulators and industry leaders are increasingly calling for stronger standards, intelligence-sharing and advanced encryption, alongside the IMO’s existing cyber risk guidelines.

As shipping invests in cleaner fuels and new technologies, it must also invest in digital resilience. In an era of mounting global instability, keeping supply chains moving means securing them, digitally as well as physically.

The dark fleet and the data gap

Compounding these challenges is the shadowy rise of the “dark fleet” untracked tankers carrying sanctioned oil between Russia, Iran and previously, Venezuela...

The Atlantic Council estimates they now represent 17 % of global tanker tonnage. These ships operate in opacity: they often obscure their AIS tracking signals, use deceptive ownership structures, and avoid reputable insurers and classification societies.

The goal is to evade sanctions and monitoring, but the proliferation of untracked voyages means a growing blind spot in global data.

For legitimate operators under ETS scrutiny, the contrast is stark.

Compliance costs rise, while rogue actors sail tax-free...

For regulators trying to curb emissions, the dark fleet poses a serious problem.

Legitimate shipping companies are spending money to comply with ETS monitoring, emissions reporting, and efficiency rules, while rogue operators run “tax free” and off-book.

This undermines the integrity of emissions data. If a significant slice of global shipping emissions isn’t being measured or reported, it skews the baseline and makes it harder to enforce global reductions.

It’s a regulatory asymmetry that frustrates honest players and rewards bad actors. For example, a compliant tanker company might pay for cleaner fuel or carbon credits, whereas a sanctions-busting tanker sailing without any scrutiny pays nothing (aside from the risk of getting caught, which historically has been low).

This dynamic can also distort freight markets.

Unscrupulous operators can offer lower rates because they cut corners on safety, maintenance, and compliance (effectively a form of carbon leakage), creating competitive distortion.

And if global volatility increases further and more conflicts concerning energy sources develop, more and more ships may "go dark" to avoid sanctions and higher carbon taxes.

Once more, without total unilateral action, this is not a problem that will go away.

Looking ahead for the shipping industry

The thread running through all these issues, from cybersecurity warnings to the dark fleet alarm, is that shipping’s decarbonisation is not just a technical challenge. I

t’s about alignment: political alignment, regulatory alignment, financial alignment.

Technology is progressing (prototypes of green ammonia engines exist , wind-assisted vessels, and digital efficiency tools are growing), but the speed of adoption will depend on how well global actors row in the same direction.

Mechanisms like the EU ETS and CBAM are landmark steps, internalising carbon costs and nudging behaviour.

However, they must be matched by reinvestment. There’s a strong case for recycling a portion of ETS revenues back into maritime innovation and infrastructure, rather than letting it all vanish into general budgets.

The industry needs help to build that alternative-fuel bunkering network, to retrofit ships, and to fund R&D for truly zero-emission vessels.

For analysts tracking the sector, the interplay between carbon prices, geopolitical risk, and route disruptions is creating a new calculus.

We’re essentially witnessing the emergence of a carbon-geopolitical feedback loop, wars and crises make voyages longer and more carbon-intensive; higher carbon intensity in turn raises costs under schemes like the ETS; those costs then influence trade patterns and even political sentiment.

Shipping companies now must model and hedge both physical risks (like chokepoint closures) and carbon market risks.

Those that can integrate these considerations, with the help of carbon experts such as CFP Energy, will be better positioned to turn volatility into opportunity.

In the face of turbulence, the winners will be those who innovate and adapt: embracing digital solutions to optimise voyages (cutting emissions and costs), investing in resilient and efficient ships, and locking in smart fuel procurement and carbon contracts to buffer against shocks. 

The vision of a net-zero shipping industry by 2050 is still alive, but the voyage will be far from smooth sailing...It will require unprecedented cooperation across nations and between public and private sectors.

As we’ve seen, geopolitics can either accelerate or stall progress by decades, building resilience into the decarbonisation journey is key.

For immediate support from our award-winning carbon compliance team, get in touch here.