Current policy instruments are insufficient, and the transition of the shipping sector is progressing too slowly. In a new analysis, the Swedish Energy Agency calls for targeted support, strengthened research, and stricter national policy measures.

On behalf of the government, the Swedish Energy Agency, with assistance from Transport Analysis, has examined what support is needed to accelerate the transition of shipping and aviation to fossil-free operations. The analysis shows that the EU’s new regulatory framework creates stronger transition pressure than before, but that governance is still not sufficient to achieve net-zero emissions by 2050. For example, the inclusion of shipping in the EU ETS has mainly resulted in the sector purchasing emission allowances and thereby contributing to emission reductions in other industries rather than within shipping itself, the agency notes. Nor does the FuelEU Maritime regulation — the only policy instrument specifically aimed at initiating a transition within shipping from the outset — provide sufficient incentives for a rapid shift to fossil-free fuels, since the initial requirements can be met using fossil alternatives such as LNG well into the 2030s.

“Investment uncertainty, long lead times, and technical barriers mean that additional national incentives are needed for the transition to take place on time,” said Angelina Björklund, Head of Investigation at the Swedish Energy Agency, when the report was released in early February.

The Swedish Energy Agency concludes that there is a need for support to accelerate the transition of shipping and therefore proposes a combination of targeted funding, strengthened research, improved coordination, and clearer long-term governance. An appropriate authority should be tasked by the government with designing a support program that includes both financial assistance and a networking component that promotes and broadens collaboration across the entire shipping value chain so that ideas can be developed further in pilot projects. Some form of knowledge and expert support could also be included in the program.

The Swedish Energy Agency also proposes introducing support for the expansion of shore-side electricity (onshore power supply) to enable Sweden to meet the AFIR requirements by 2029. The proposal entails assigning the Swedish Environmental Protection Agency to carry out targeted calls within the Climate Leap program for investments in shore power infrastructure.

Finally, the agency sees a need for a national strategy to ensure the long-term transition of shipping and to enable the goal of net-zero emissions before 2050 to be achieved. The strategy, which should include both short- and long-term action plans, would serve as the foundation for the proposed support program. The agency proposes that the government assign a suitable actor to develop the strategy in broad cooperation with industry, the public sector, and academia.