Recently, the United Nations Conference on Trade and Development (UNCTAD) released a pertinent report – the Review of Maritime Transport 2023. The main focus of this report is on the issue of Greenhouse Gas (GHG) emissions from international shipping and the challenges of decarbonization in the industry.
Emissions from International Shipping
The report reveals a concerning statistic; GHG emissions from international shipping are 20% higher in 2023 than they were a decade ago. This is significant given that the shipping industry contributes over 80% of the world trade volume and nearly 3% of global GHG emissions.
Growth in Shipping Volume Amidst Covid-19
Global maritime shipping volumes experienced a 0.4% drop in 2022 due to disruptions caused by the Covid-19 pandemic. Interestingly, however, projections for 2023 show potential growth of 2.4%. Containerized trade reveals similar trends, with expected growth of 1.2% in 2023 and an extended growth of 3% between 2024-2028. The report also indicates robust growth in oil and gas trade volumes during 2022.
Non-Availability of Alternative Fuels and Aging Fleet
As of January 2023, commercial ships were, on average, 22.2 years old, with more than half of the world’s fleet being over 15 years old. The increasing age of the world fleet raises concerns about the lack of alternative fuels available at scale, which are costly and require more expensive ships to use them.
Transitioning to Alternative Fuels
The report highlights the difficulty ship owners face in renewing their fleet without clarity on technology and regulatory regimes, a problem mirrored at port terminals. Currently, 98.8% of the global fleet uses conventional fuels like heavy fuel oil, light fuel oil, and diesel/gas oil, with only 1.2% using alternative fuels. However, progress is evident; 21% of vessels on order are designed to run on alternative fuels.
Cost Estimates and Transition Challenges
Decarbonizing the world’s fleet by 2050 would require annual investments ranging from USD 8 billion to USD 90 billion. Full decarbonization could double yearly fuel costs, which necessitates a planned and fair transition for the sector. The International Maritime Organization (IMO) has set a target to achieve net-zero GHG emissions by around 2050.
UNCTAD’s Recommendations for Economic Incentives
The report suggests employing renewable ammonia and methanol fuels for newer ships with dual-fuel engines. To achieve zero or near-zero carbon dioxide equivalent emissions, sustainable marine fuels must be used. The UNCTAD advocates for prompt regulatory intervention, stronger investments in green technologies, and fleets besides economic incentives for promoting alternative fuels.
Initiatives by International Bodies to Decarbonize International Shipping
Several initiatives by international bodies aim to decarbonize international shipping. For instance, IMO’s Energy Efficiency Existing Ship Index (EEXI) attempts to limit the technical carbon intensity of ships, and Carbon Intensity Indicator (CII) grades ships based on their operational carbon intensity. The Green Voyage 2050 Project is a partnership endeavor between the Government of Norway and IMO aiming to instigate a lower carbon future in shipping.
