Shipping industry does not have an easy path to decarbonization

The sector of Marine transport lacks clarity about the future fuels and regulatory systems, which is holding back companies from replacing aging vessels amid pressure to decarbonise more quickly, the UN agency UNCTAD said on Wednesday. UN.

Maritime transport, which represents more than 80% of world trade and almost 3% of global carbon dioxide emissions, has received calls from environmentalists and investors to adopt more concrete measures, such as a carbon tax.

“We call for global action to decarbonize maritime transport. However, we recognize that it is not an easy task and also the cost that may be associated with it,” the agency’s Secretary General, Rebeca Grynspan, declared at a press conference in London.

In its Maritime Transport Review for 2023, the United Nations Conference on Trade and Development (UNCTAD) expressed concern about the aging of the world’s maritime fleet.

At the beginning of 2023, commercial vessels had an average age of 22.2 years, two years older than a decade ago, according to the report. “More than half of the world’s fleet is over 15 years old”stated UNCTAD.

“Shipowners face the challenge of fleet renewal without clarity regarding alternative fuels, green technology and regulatory regimes to guide shipowners and ports, while port terminals face similar challenges in vital investment decisions.”

In July, countries adopted a revised greenhouse gas strategy for shipping that set a net-zero emissions target by or around mid-century, which environmental groups considered unambitious.

Decarbonizing shipping by 2050 will require large investments, and the UNCTAD report cites estimates from Norwegian risk manager DNV indicating additional annual costs of between US$8 billion and US$28 billion for ships to reach that goal.

The sector is exploring various technologies, such as ammonia and methanol, in an effort to move away from dirtier fuel. Wind-assisted propulsion is another clean energy option being studied.

According to the UNCTAD report, expanding maritime fuel production, distribution and supply infrastructure to supply 100% carbon-neutral fuels by 2050 would require estimated annual investments between $28 billion and $90 billion.

“Estimates suggest that full decarbonization could increase annual fuel costs by between 70% and a 100% compared to current levels,” says UNCTAD. “Marine transport cannot decarbonize on its own.”

The volume of maritime trade contracted marginally by 0.4% in 2022, but UNCTAD expects it to grow by 2.4% in 2023, with moderate growth in 2.1%–2.2% planned between 2024-2028.