Diego Rodríguez Paez
Director of Logistics and Industry Practice
AMI
Ports in the region serve as vital links in supply chains connecting mines, farms, industrial parks, and consumption centers to global markets. However, freight transport—covering ships, trucks, aircraft, trains and warehouses—is responsible for a significant share of global greenhouse gas (GHG) emissions. According to researchers at the MIT Supply Chains Initiative, freight transport produces around 8% of global emissions, and when warehousing operations are included, the figure rises to 11%. Within this total, shipping accounts for almost 3% of human-caused CO₂ emissions. In Latin America, the urgency to decarbonize maritime transport becomes even more apparent given the region’s rapid trade growth, its dependence on fossil fuels and its vast renewable-energy potential.
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An International Regulatory Framework Deferred at the IMO
Unlike other logistics segments, such as land transport, which rely on national policies, international shipping is regulated by the International Maritime Organization (IMO). This makes the postponement of the formal adoption of the Net Zero Framework (NZF) not just a temporary setback but a stark reminder of geopolitical fragmentation in the IMO, where climate ambition is stalled by the threat of trade reprisals from key powers.
For Latin America, the delay intensifies the investment dilemma by undermining the carbon-pricing “signal” investors need: the industry cannot commit to costly bunkering infrastructure (e.g., for green methanol or ammonia) without a predictable global carbon price. The resulting patchwork of regional regulations not only extends logistical uncertainty but also creates cost disparities that could affect the competitiveness of Latin American exports to regulated markets like the European Union. Furthermore, the delay postpones the creation of the IMO fund, a potential source of climate finance vital for supporting port‑infrastructure transitions in developing countries, turning a potential opportunity into a loss of development capital.
As a representative of a global shipping company noted at a recent conference, the industry faces a “chicken-and-egg” dilemma: shipowners are reluctant to order vessels with alternative engines because no supply of green fuels exists; fuel producers, in turn, will not invest without guaranteed demand. Dual‑fuel ships (capable of running on methanol and fuel oil), whose deliveries began in 2023, are an attempt to break this cycle, sending a demand signal while gathering operational cost and emissions‑abatement data.
What Options Are Currently Available to Improve Vessel Efficiency?
The first lever for reducing emissions in maritime transport is using less energy per ton transported. Naval engineers are working on more efficient hull and propeller designs, and on operational practices such as smart speed reduction—sailing at an economical speed when schedules allow to save fuel.
Other innovations draw inspiration from nature. For example, penguin plumage traps air bubbles that reduce drag when swimming; ships can replicate this effect by using air-lubrication systems that inject bubbles beneath the hull. A study by the International Council on Clean Transportation (ICCT) estimates that these systems reduce fuel consumption and emissions by between 3% and 13%, depending on draft and speed.
Another emerging technology is the rotor sail: vertical cylinders that use the Magnus effect to generate lift. On suitable routes, these sails can reduce fuel consumption by 1% to 12% per rotor (thect.org). Several shipping companies have already installed rigid sails, kite sails or rotor sails on their fleets. Although savings depend on wind speed and route, these technologies complement efficiency measures and allow a more gradual adoption of alternative fuels.
Shore Power: Using Electricity at the Dock
Ships continue to emit while berthed because they must keep auxiliary generators running to power onboard operations. Connecting to the local electrical grid—known as shore power or cold ironing—allows these generators to be shut down, dramatically reducing port pollution. A report from the Juneau, Alaska, Sustainability Commission based on an EPA technology assessment notes that connecting a ship to the regional grid can reduce pollutant emissions by up to 98%, depending on the grid’s energy mix. In areas with high renewable‑energy penetration—like many Latin American countries with abundant hydroelectric power—the climate benefit is even greater. As a result, dock electrification projects are expanding in Chile, Brazil, Panama and the Caribbean.
Low- and Zero‑Emission Fuels
Although efficiency improvements are essential, the greatest potential for emissions reduction comes from replacing the fossil fuels that currently dominate the sector: 72% of marine fuel is heavy fuel oil, 26% distillates, and around 2% liquefied natural gas (LNG), theicct.org. The transition to low‑carbon fuels includes several alternatives:
Green Methanol and Biomethanol
Methanol has emerged as one of the most immediate alternative marine fuels. It is liquid at room temperature, easy to handle and can be used in slightly modified engines. The IMO and several shipping companies note that methanol produced from green hydrogen and captured carbon dioxide (e‑methanol) offers substantial emissions reductions. However, producing grey methanol (from natural gas) does not reduce lifecycle emissions; thus new regulations will require proof of origin and lifecycle analysis to ensure real benefits. Dual‑fuel ships capable of using methanol or fuel oil will allow demand for these fuels to grow and accelerate their availability in Latin America.
Natural Gas and Biogas (Bio‑LNG)
The high threat levels in the Red Sea region continue to impact operations and create uncertainty for logistics providers. This geopolitical tension has led to longer sailing routes and increased operational costs. However, if the situation normalizes, after the cease-fire agreed upon by Hamas and Israel, allowing for the resumption of traffic through the Suez Canal, it could release capacity that longer routes around the Cape of Good Hope had absorbed.
LNG is gaining traction due to existing infrastructure and its lower sulfur content. Mixing LNG with biomethane can bring emissions close to zero. Researchers from the Vector Naval group at the University of Buenos Aires have assessed specific regional cases:
- Dredging with LNG and bio‑LNG: Supplying dredgers with blends of LNG and biomethane produced in Buenos Aires province reduces dredging costs by 15% thanks to cheaper fuel and significantly cuts GHG emissions.
- Offshore support vessels: In Mar del Plata, fish‑processing waste and cattle manure could be used to produce biomethane, mixed with LNG and supplied to support vessels for offshore platforms.
- Paraguay–Paraná river: Container transport between mines in Paraguay and Buenos Aires could be decarbonized using LNG and biomethane; costs would fall and road congestion would be avoided.
- Caribbean: Combining the abundant LNG in Trinidad and Tobago with 12% biogas from cow manure in the Dominican Republic and Haiti, plus leveraging invasive sargassum algae, could generate enough fuel to decarbonize regional maritime transport, save US$600 million and create 90,000 jobs. These projects pursue a triple objective of sustainability, competitiveness and inclusion.
Hydrogen and Ammonia
Green hydrogen and ammonia are emerging as zero‑emission options for long‑distance ships. Both can be used in modified combustion engines or fuel cells. Latin America has vast renewable‑energy potential (hydropower in Brazil, Chile and Paraguay; wind in Patagonia and Colombia’s plains; solar in the Atacama Desert and north‑eastern Brazil) that could be harnessed to produce hydrogen and its derivatives at competitive prices. Countries like Uruguay and Chile already have green hydrogen roadmaps and plan to export ammonia and methanol to supply international ships. Colombia is also exploring how its Caribbean ports could become export hubs for hydrogen for maritime transport.
Batteries and Carbon Capture
For short routes and service vessels (tugs, ferries), battery‑electric ships are already viable and are being deployed in Norway, Denmark and Canada. In Latin America, projects are being evaluated for Patagonian lakes and Caribbean tourist routes. For large vessels, full electrification is impractical in the short term, but using batteries as support or in combination with fuel cells can reduce fossil‑fuel demand.
Another complementary technology is onboard carbon capture and storage (CCS). Some pilot projects install systems that capture exhaust CO₂, compress it and store it in tanks for later use or geological injection. Although costly and heavy, this option could serve as a transitional measure on existing ships while clean‑fuel infrastructure develops.
Financial and Infrastructure Challenges
Decarbonizing maritime transport requires massive investment in ships, ports and fuel plants. Ships have a lifespan of 20 to 30 years, thus each new order is crucial to meeting climate goals. Without a carbon‑price signal or clear fuel standard, green fuels remain more expensive than heavy fuel oil, while countries need to plan their electrical systems to provide the enormous amount of renewable energy that dock electrification, hydrogen production and electric trucks and trains will require.
An advantage for Latin America is its abundant renewable potential; but turning it into marine fuels will demand investment in electrolyzers, synthesis plants, bunkering infrastructure and certification. Projects must be economically viable to attract capital. Interviews with regional experts suggest that heavy‑duty electric trucks are close to cost parity with diesel trucks, implying that land electrification could advance rapidly. By contrast, maritime transport still faces a cost gap that will need supportive policies, economies of scale and technological learning to close.
How Decarbonizing Maritime Transport Unlocks Opportunities for Latin America
There are at least 4 key ways that the decarbonizing trend can lead to strong revenues for companies operating in Latin America:
- Exporting green fuels: Brazil, Chile, Mexico, Uruguay and Colombia can become suppliers of e‑methanol, green ammonia and biomethane thanks to their renewable and agricultural resources.
- Electrifying ports: Shore power installations and electric terminals reduce local pollution, improve the health of port communities and attract shipping lines seeking “green” ports.
- Developing sustainable logistics chains: Integrating maritime, rail and road transport with clean energy creates resilience, lowers operating costs and generates jobs in engineering, construction and agriculture (for biomass and biogas).
- Innovation and training: The transition requires new skills in naval engineering, chemistry and energy management. Universities and research centers—such as the Vector Naval group in Argentina—are developing feasibility studies tailored to local realities.
Next Steps
Contact us to learn more about how our market intelligence can identify emerging opportunities in decarbonization—such as where green fuel production is scalable or which ports are ready for electrification—and quantify their economic impact.
Our team of analysts can also monitor and interpret regulatory developments like carbon pricing schemes across regions, helping companies plan investments and helping governments design policies aligned with global standards.
In addition, by mapping regional supply chains and stakeholder networks, AMI could help firms find local partners to develop green logistics hubs, while advising authorities on incentives that attract sustainable infrastructure investment.
In essence, AMI’s market intelligence services can convert fragmented information into actionable insights, enabling both businesses and policymakers to make confident, data‑driven decisions.
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