Evaluating Transition Plans in Japan’s High Emission Sectors 2025 Shipping Sector
Background and Objective
In 2023, KSI conducted a study to assess the extent to which Japanese high-emitting industries and the banking sector have advanced the formulation of transition plans and published a report “Evaluating Transition Plans in Japan’s High Emission Sectors”. The results showed that while disclosure of historical emission data is progressing, there are challenges in setting 1.5°C-aligned science-based targets, presenting corresponding emission pathways, establishing short-term implementation plans to achieve reduction targets, and defining Scope 3 reduction targets. In the coming years, attention will increasingly focus not only on revising targets to be more ambitious, but also on verifying implementation and actual achievement.
Building on these findings, this study, while following the perspective of the previous one which focused on providing an overview of corporate transition plans, gives greater emphasis on examining the implementation status of transition plans, actual emission reduction performance, and the consistency of business portfolio and capital allocation plans with the stated transition strategies. The study also compares Japanese companies with their international peers to identify current trends and challenges.
Coverage
Five Japanese power companies selected based on market capitalization and emissions
Four overseas companies selected as benchmarking peers based on market capitalization, emissions, country, and TPI*2 assessment
Nippon Yusen Kabushiki Kaisha
Mitsui O.S.K. Lines, Ltd.
Kawasaki Kisen Kaisha, Ltd.
(Overseas peer companies)
A.P. Møller – Mærsk A/S
Evergreen Marine Corporation (Taiwan) Ltd.
Key Findings
Scope 1 & 2 Emission Reduction Target (Indicator 1.1.1)
Fossil fuel use in vessel operations is a key emission source in shipping
Maersk leads peers with a 2040 net-zero target; the other four companies target 2050. Interim target setting vary by company
NYK and Maersk set absolute emission reduction targets only. MOL, K Line, and Evergreen also set emission intensity targets
Scope 3 Emission Reduction Target (Indicator 1.2)
Of the five companies, only Maersk has set a standalone Scope 3 emission reduction target
NYK and MOL aim to achieve their 2050 net-zero targets on a combined Scope 1, 2, and 3 basis
Level of Ambition of Emission Reduction Target (Indicator 1.3)
Per TPI assessment, all five companies' near- and long-term targets align with a 1.5°C scenario; at the medium-term level, only one company align with 1.5°C, two with Well Below 2°C, one with the stated policies scenario, and one falls outside the scenario range
On SBTi certification, NYK and K Line obtained 2°C certifications in the past but have not renewed them. Maersk obtained 1.5°C certification in 2024
Business Portfolio Plan beyond 2030 (Indicator 1.4)
The three Japanese companies expand into new businesses by leveraging their strengths as integrated shipping groups. All three are pursuing opportunities in offshore wind, hydrogen, ammonia, and LNG infrastructure, including participation in plant engineering and broader energy value chains.
Maersk is evolving from a shipping company into an integrated logistics provider; Evergreen is focused on advancing its container transport operations
Scope 1 & 2 Absolute Emissions Reduction Performance (Indicator 2.1)
Among Japanese companies, NYK and MOL show a declining trend over the past three years, while MOL has maintained consecutive annual reductions
NYK and MOL need to accelerate their pace of reduction to meet their 2030 targets
Among overseas companies, Maersk shows a declining trend over the past three years but at merely 0.8% average annual reduction. Evergreen has increased significantly
MOL, K Line, and Evergreen set intensity targets and have improved emission efficiency toward their targets
Scope 1&2 Emissions Intensity Reduction Performance (Indicator 2.1)
All five companies disclose performance data over time, each covering their major emission categories
All five show an increasing trend over the past three years
For the three Japanese companies, Category 15 is the largest source due to their equity stakes in ONE. For Maersk, Category 4 accounts for 48% of total Scope 3; for Evergreen, Category 3 accounts for 48%
Application of Internal Carbon Pricing (Indicator 2.3)
All three Japanese companies have adopted internal carbon pricing. NYK and MOL disclose short-, medium-, and long-term price schedules applied to investment analysis
Maersk applies internal carbon pricing to investment analysis, while Evergreen has yet to introduce it
Emission Reduction Targets and Executive Compensation Linkage (Indicator 2.4)
All three Japanese companies link emission metrics to executive compensation
Maersk uses the operational efficiency metric EEOI as its indicator. No linkage between reduction targets and compensation can be confirmed for Evergreen
Implementation Plan and Progress (Indicator 3.1) Thermal Power Transition Plans
JERA and Kansai Electric plan to phase out coal by increasing hydrogen/ammonia co-firing and using CCS, while J-POWER is expected to retain coal + hydrogen co-firing into the 2040s.
While overseas companies have already phased out coal or set phase-out timelines, Japanese companies have not disclosed timing.
Implementation Plan and Progress (Indicator 3.1) :Fuel Conversion
The three Japanese companies plan to expand LNG vessels through 2030, then transition gradually to alternative-fuel vessels — primarily ammonia — toward 2050.
Maersk pursues a methanol fuel strategy, with 38 methanol vessels planned by 2030. Evergreen plans to newbuild 60 methanol/LNG dual-fuel vessels by 2030.
Carbon Offset Use (Indicator 3.3)
NYK, MOL, and Maersk have each stated that direct emission reductions take priority, and that carbon offsets will not be used to meet near-term targets
NYK and MOL have made concrete commitments to procure CDR credits by 2030
Capital Allocation (Indicator 3.4)
The Japanese companies view decarbonization as a growth opportunity, investing hundreds of billions of yen in fuel conversion and decarbonization businesses
Of the two overseas companies, Maersk pursues an early-commitment strategy while Evergreen prioritizes proven technologies to limit risk
Analysis
The 2023 IMO GHG Strategy sets a net zero target for total GHG emissions from international shipping by around 2050, with indicative milestones of a 20–30% reduction by 2030 and 70–80% by 2040 against a 2008 baseline. Additional targets include a 40% reduction in CO₂ emissions per unit of transport by 2030 and a 5–10% uptake of zero-emission fuels. The strategy also expanded the GHG boundary from Tank-to-Wake (direct vessel emissions) to Well-to-Wake, covering the full lifecycle including emissions from fuel production, transport, and storage.
Among the five companies assessed, Maersk leads with a 2040 net zero target; the other four target 2050. All have set milestone targets on an absolute or intensity basis (see p.14-15). Direct comparison is difficult due to differing base years, but Maersk stands out as the only company rated at the 1.5°C scenario for both near- and medium-term by TPI (Transition Pathway Initiative), and has also obtained SBTi 1.5°C certification — reflecting a notably ambitious target. For the three Japanese companies, medium-term TPI assessments place NYK and KLine below 2°C, while MOL falls outside the scenario range. On SBTi certification — widely adopted among Japanese companies as a signal of decarbonization commitment — NYK and KLine hold 2°C certifications, though these are based on their previous targets. Updating these certifications to reflect their latest targets will be an important milestone.
Looking at each company's Scope 1 and 2 emission reduction performance over the past three years, only MOL achieved consistent year-on-year reductions. NYK and Maersk show a general downward trend but each recorded an increase in one year. KLine and Evergreen saw emissions increase over the three-year period.
In the shipping sector, Scope 1 — primarily emissions from operated vessels — is the priority, and Scope 3 emission reduction targets are considered relatively less critical. However, the IMO has expanded its regulatory scope to include upstream fuel emissions (corresponding to Scope 3 Category 3) as noted above, and the adoption of green steel in shipbuilding (Scope 3 Category 2) has begun in recent years in the market, suggesting Scope 3 may attract greater attention in the shipping sector going forward. On target-setting, NYK and MOL have explicitly included Scope 3 in their 2050 net zero targets but have not set milestone targets. Among the companies assessed, Maersk is the only one with a standalone Scope 3 reduction target.
While the Scope 3 emissions categories disclosed differ among companies, all have reported increasing Scope 3 emissions over the past three years.
It should also be noted that the shipping sector involves not only owned and operated vessels but also chartered-in and chartered-out vessels (*1). Where companies do not directly operate a vessel, its emissions are recorded under Scope 3. Given this, Scope 1 coverage and target-setting alone are inherently insufficient; disclosure and target-setting for emissions from chartered-in and chartered-out vessels are needed to improve transparency.
The Energy Efficiency Operational Indicator (EEOI) — measuring emissions per unit of cargo weight and transport distance during vessel operation — is the widely used metric for shipping emission efficiency, and is adopted in the SBTi shipping sector guidance as well as the IEA Net Zero Emissions by 2050 scenario (NZE 2050). However, there is no legal obligation to disclose such indicators. Among the five companies assessed, some disclose fleet-wide averages, but none provide data by individual vessel or vessel type. That said, emission efficiency by vessel type and size, along with fleet composition and operational status, are undeniably important elements of a shipping company's transition plan — and areas of growing investor interest.
According to a survey by ClassNK (2*), of approx. 40,000 vessels of 5,000 GT or more in service as of end of December 2025, alternative-fuel vessels account for 2.5%, of which roughly 74% are LNG-fueled, followed by LPG (15%) and methanol vessels (10%). Among approx. 5,700 vessels on order, alternative-fuel vessels represent 20.8%, with LNG vessels comprising 56%, followed by methanol at 26%, LPG at 12%, and ammonia vessels at 4%.
Transitioning to alternative fuels is the most critical element of decarbonization in the shipping sector, yet it is far from straightforward. The three Japanese companies, as diversified shipping operators, handle a wide range of cargo types — dry bulk, energy, automotive, and more — each with different vessel types, route distances, and operating models, meaning the optimal alternative fuel also varies. Their fuel switching strategies therefore differ materially from those of the two global peers assessed, which specialize in container shipping.
On fuel conversion, all three Japanese companies plan to expand LNG-fueled vessels through 2030, then wind them down toward 2050, while scaling up zero-emission vessels — primarily ammonia-fueled — from 2030 onward. This aligns with the Japanese government's emphasis on ammonia as a priority area. Beyond ammonia, each company also explores a broad range of options including methanol, hydrogen, and biofuels. The global peers, by contrast, appear to be moving toward methanol. Maersk made methanol its centerpiece, building methanol-adopted vessels and securing long-term green methanol supply agreements as early investments. However, from 2025 onward, Maersk has shifted from a methanol-only strategy to one that also incorporates LNG, driven in large part by the significant challenge of green methanol supply constraints.
Low-carbon fuels such as methane, methanol, ammonia, and hydrogen face an absolute supply shortage. According to DNV's Maritime Forecast to 2050, projected low-carbon fuel supply across all industries in 2030 is 70–100 Mtoe (*3, *4), while shipping sector demand alone of 50 Mtoe. Shipping, aviation, the chemical industry, and other sectors will face competition for a limited pool of low-carbon fuels.
Infrastructure for alternative fuels is another challenge. While construction of alternative-fuel vessels and technological development advances, fuel supply infrastructure remains underdeveloped globally. According to UNCTAD, decarbonizing the global fleet by 2050 will require USD 8–28 billion per year in vessel investment and USD 28–90 billion in infrastructure — yet investment falls far short (*5).
Large-scale expansion of alternative fuels cannot be achieved by a company. Government initiative and support are essential to reduce uncertainty and mobilize investment, as is cross-industry coordination spanning financial institutions, shipyards, and fuel suppliers.
As FuelEU Maritime regulations take effect alongside GHG Fuel Intensity (GFI) regulations, fuel switching will become critical not only in technical and infrastructure terms but also in cost management. Failure to meet IMO regulatory targets will trigger penalty payments proportional to excess emissions — and those targets are expected to tighten each year. While alternative fuels carry higher upfront costs than conventional fuels, ClassNK's research suggests that by around 2035, GHG regulatory costs could match and subsequently exceed fuel costs (*1).
Geopolitical risks have a significant impact on business and sustainability in international shipping. From late 2023, deteriorating conditions in the Red Sea forced many vessels to reroute around the Cape of Good Hope, avoiding the Suez Canal. This increased sailing distances and fuel consumption, with knock-on effects on shipping CO₂ emissions. At the time of writing, conflict involving the US, Israel, and Iran is severely disrupting energy transportation through the Strait of Hormuz. Such geopolitical risks are likely to persist and pose threats that go beyond cost — they have the potential to undermine operations entirely. In decarbonization terms, they can also negate companies' emission reduction efforts.
Political uncertainty around shipping sector decarbonization is also rising. IMO Marine Environment Protection Committee session in October 2025 had been expected to adopt a net zero framework including fuel regulations and incentive mechanisms for zero-emission vessels, but resolute US opposition and the announcement of countermeasures led to the session closing without a vote and a one-year postponement. The broad direction is unlikely to change, but fuel standards and economic measures may end up weaker than anticipated. This uncertainty makes investment decisions and business planning increasingly difficult for companies.
Shipping companies will likely need not only robust risk management, but also greater consideration of portfolio transformation across geography, energy, and business mix.
While the shipping sector supports economic activity by meeting global transport demand, it is also a driver of economic transformation in its own right, identifying new growth opportunities and fostering economic activity in emerging sectors linked to decarbonization.
All three Japanese companies expect global LNG demand to continue for the foreseeable future and invest to secure medium- to long-term LNG transport contracts. KLine plans to expand its LNG carrier fleet from the current 47 vessels to 65 by FY2026 and further to 75 by 2030. NYK, beyond its traditional crude oil and petroleum product transport business, has broad participation in the oil and gas value chain — including FPSOs (Floating Production, Storage and Offloading units) and drillships supporting upstream and downstream operations. None of the companies disclose plans to reduce fossil fuel-related businesses or divert related assets.
In terms of new cargo types and business areas, all three companies point to next-generation energy value chains — offshore wind power, hydrogen, and ammonia — as common priorities. On offshore wind, NYK advances the operation of crew transfer vessels and the design of cable-laying vessels for grid reinforcement. MOL has joined an offshore wind project in Taiwan to deepen its understanding of the business, seconding employees and providing work vessels; it has also begun focusing on the overseas transport of wind turbine components via its dry bulk business. KLine has launched a marine geological survey business as part of its offshore wind support operations. On next-generation energy, NYK focuses on ammonia under the hypothesis that it can be mass-produced globally with significant room for cost reduction, and participates in multiple Green Innovation Fund projects. KLine has entered liquefied CO₂ transport, commencing full commercial CCS shipping in Europe. In this way, each company is evolving from a diversified shipping operator into a broader platform extending into energy and infrastructure with shipping at its core. Further expansion into adjacent businesses supporting society's energy transition is expected going forward.
In connection with companies' progress on fuel switching and alternative-fuel vessel construction, asset lock-in risk warrants attention.
Long-lived assets such as vessels carry transition risk. With an operational life of 20–25 years, early scrapping of existing vessels is economically impractical. As noted above, alternative-fuel vessels currently represent only a small fraction of the fleet in service, and the existing fleet remains heavily dependent on fossil fuels. The three Japanese companies are currently expanding their LNG-fueled fleets, but given shipbuilding lead times of 2–3 years and payback periods of 10–15 years, ordering decisions made in 2025–2026 will directly affect whether 2050 net zero targets are achievable. Looking at each company's LNG vessel expansion plans through 2030: NYK plans 29 LNG and LPG vessels combined; MOL plans 90 LNG and methanol vessels combined; and KLine plans to expand to 35 LNG vessels. All three plan to reduce LNG vessels after 2030, but none has disclosed plans for vessel scrapping or stranded asset risk mitigation. With tightening regulations anticipated, time is also running short to address stranded asset risk not only for LNG vessels but for the conventional fossil-fuel vessels that still make up the majority of fleets.
The same risk applies to the LNG carriers. According to a 2024 Kühne Foundation study, the LNG carrier orderbook stands at 356 vessels, or equivalent to 55% of existing fleet capacity. The current average age of LNG tankers is said to be 7 years. Yet LNG tankers have a remaining useful life of approximately 30 years from a statutory and physical standpoint, and with additional capacity set to enter the market, LNG carriers are projected to face oversupply even if demand continues through around 2035 (*6). The difficulty of redeploying LNG tankers to other cargo types represents a further significant risk.
Annotations
*1: Chartered-in vessels: Vessels borrowed from another company and operated by the charterer. Where the charterer operates the vessel itself, emissions are recorded as Scope 1; where operation is outsourced to a third party, emissions are recorded as Scope 3. Chartered-out vessels: Vessels owned by a company and leased to another party. Emissions are recorded as Scope 3 under the lessor's leased assets.
*2: NIPPON KAIJI KYOKAI（ClassNK）, ClassNK Alternative Fuels Insight Version 3.2 January 2026 https://www.classnk.or.jp/hp/en/info_service/ghg/index.html
*3: DNV, Maritime Forecast to 2050 https://www.dnv.com/maritime/maritime-forecast/
*4: Million tonnes of oil equivalent
*5: UNCTAD, News Release “Bold global action needed to decarbonize shipping and ensure a just transition: UNCTAD report”
https://unctad.org/news/bold-global-action-needed-decarbonize-shipping-and-ensure-just-transition-unctad-report
*6: Kühne Foundation (2024). Fossil fuel carrying ships and the risk of stranded assets in the transition to a low-carbon economy - Key Findings and Implications for Financiers and Industry Actors. Schindellegi, Switzerland.
【Full report in English will be published soon】