How can we decarbonize shipping?
Shipping is one of the hardest sectors to decarbonize. Here’s what needs to happen to bring it in line with climate targets.
In 2023, the EU adopted FuelEU Maritime: the world’s first green shipping fuel law. It aims to cut shipping emissions by two percent by 2025 and 80 percent by 2050 through a bundle of measures, such as incentives for fuels derived from renewable power sources.
This is part of a growing global recognition of the need to decarbonization shipping, which contributes approximately three percent of annual global greenhouse gas emissions.
No more ‘business as usual’
Like every other sector, shipping shoulders its share of responsibility to reach net-zero greenhouse gas emissions. This will require a concerted effort – under a ‘business as usual’ scenario, marine trade volumes could triple by 2050 with a corresponding growth in the sector’s emissions.
Governments and other authorities are conscious of the need to decarbonize. In addition to introducing FuelEU Maritime, the EU is bringing shipping into its emissions trading system from 2024, while the International Maritime Organization (IMO) recently made it mandatory for all ships to measure and work towards improving their energy efficiency. Operators that fail to meet this growing body of requirements could face financial penalties.
Net-zero innovation
The good news is that there are already many decarbonization initiatives.
Many efforts are focused on adopting low- and zero-emission fuels. Danish shipping company Maersk announced in June that it has ordered six vessels with engines capable of operating on methanol, which already has supporting storage and transport infrastructure.
There are also hopes for ammonia, which the IEA predicts could meet 45 percent of shipping fuel demand by 2050. Another candidate is clean hydrogen, which although expensive presents the best emissions reductions over the entire lifecycle of the fuel.
Meanwhile, engineers are working on next-generation engines, retrofitting existing ships, and electrification. It is likely that a combination of these approaches will be needed.
Challenges on the horizon
Decarbonization is a significant challenge for shipping, which is widely acknowledged as an especially hard-to-abate sector.
Shipping is inherently international, so co-ordination is far from straightforward. A report from Arup, Lloyd’s Register, and The Resilience Shift suggests that global green shipping corridors – sea routes on which green measures are deployed – could be valuable in supporting decarbonization. These would help sustainable fuel suppliers match supply to demand and facilitate intergovernmental collaboration.
But there is still no consensus yet on the optimal green technologies – many sustainable shipping fuels are still emerging, their true costs unknown – or on how the regulatory environment will take shape in coming years.
Perhaps the largest problem, however, is the sheer cost of decarbonizing shipping. Shell puts the cost at US $1.65tn by 2050 and Maersk at US $2tn, with investment in land infrastructure and fuel production facilities the main expense. There are no shortcuts to sustainability – for instance, while retrofitting is a good way of keeping existing ships in operation, this is economically viable for less than 10 percent of the current global merchant fleet.
All hands on deck
The decarbonization of shipping will require a new collaborative approach. This involves governments, regulators, academics, NGOs, and companies from all relevant value chains – from shipbuilding to fuel production – as they work together to facilitate the innovation, investment, and market upscaling necessary to reach net-zero emissions.
Governments can join forces to incentivize the adoption of green shipping technologies on a global scale. Engaging in open dialogue can help identify best practices and set standards. Sharing of data (e.g. energy efficiency data required by the IMO) will allow stakeholders to plan for their next steps while keeping track of progress.
With this kind of collaboration, this hard-to-abate sector can be brought in line with the net-zero ambition and play its part in limiting global warming.
