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Decarbonising shipping comes at a USD1 tn cost

At least USD1 trillion of capital investment in land-based and ship-related infrastructure is required to reach the 2050 goal of reducing shipping’s greenhouse gas emissions by 50 percent of 2008 levels.

The 2050 target, which was set by the International Maritime Organization (IMO), will require significant infrastructure investments in new fuel production, supply chains, and a new or retrofitted fleet.

A study by University Maritime Advisory Services (UMAS) and the Energy Transitions Commission for the Getting to Zero Coalition looked into the scale of this challenge and forecast that between 2030 and 2050 an average investment of USD50-70 billion annually for 20 years would be required.

If shipping is to fully decarbonise by 2050, this would require further investments of some USD400 billion over 20 years, bringing the total to USD1.4-1.9 trillion.

While the figures seem daunting, Johannah Christensen, managing director, head of projects and programmes at the Global Maritime Forum, a partner of the Getting to Zero Coalition, said that this investment should be seen in the context of global investments in energy. In 2018, this amounted to USD1.85 trillion. “This illustrates that shipping’s green transition is considerable, but certainly within reach if the right policy measures are put in place,” he added.

Land-based investments – including in the production of low carbon fuels, their storage and bunkering infrastructure – represent 87 percent of the total investment required.

Only 13 percent is related to the ships themselves, according to the study. These investments include the machinery and onboard storage required for a ship to run on low carbon fuels in newbuilds and, in some cases, for retrofits.

Ship-related investments also include investments in improving energy efficiency, which are estimated to grow due to the higher cost of low carbon fuels compared to traditional marine fuels.

“Much of shipping’s decarbonisation will take place on land. It is a systemic transformation that goes beyond the capabilities of the maritime industry alone. We need to bring together the full range of upstream and downstream fuels value chains to unlock shipping’s shift to zero carbon energy sources. Done right, this represents a trillion-dollar market opportunity,” commented Lord Adair Turner, chair of the Energy Transitions Commission.

www.globalmaritimeforum.org

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