Shipping needs at least $1 trillion investments to halve GHG emissions by 2050

Singapore — At least $1 trillion of capital investment in land-based and ship-related infrastructure will likely be required to halve international shipping's greenhouse gas emissions by 2050, a joint statement by the Global Maritime Forum, Friends of Ocean Action and the World Economic Forum said.

In April 2018, the International Maritime Organization announced its GHG strategy and targets to improve CO2 efficiency in shipping. The IMO has set targets that include a 50% cut in the shipping sector's GHG emissions by 2050 compared with 2008 levels.

A new study by global maritime advisory UMAS and the Energy Transitions Commission for the Getting to Zero Coalition spells out the scale of the challenge to achieve this goal, the statement said Monday.

The Getting to Zero Coalition is a partnership between the Global Maritime Forum, the Friends of Ocean Action, and the World Economic Forum.

Depending on the production method, the cumulative investment needed between 2030 and 2050 to halve shipping's emissions amounts to about $1 trillion-1.4 trillion, or an average of $50 billion-$70 billion annually for 20 years, it said.

If shipping is to fully decarbonize by 2050, this will require further investments of some $400 billion over 20 years, bringing the total to $1.4 trillion-$1.9 trillion, it added.

The biggest share of investments is needed in land-based infrastructure and production facilities for low carbon fuels, which make up around 87% of the total, it said.

This include investments in the production of low carbon fuels, and the land-based storage and bunkering infrastructure needed for their supply, it said.

Only 13% of the investments needed concern the ships themselves, it said, adding that these include 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 with traditional marine fuels, it said.

Support from industry

The widespread use of zero CO2 bunker fuels is imperative for international shipping to trim its GHG emissions, industry sources said Tuesday.

Equally important is the role of governments and financial institutions, who must help shipping achieve CO2 emissions reduction targets in line with the Paris Agreement on climate change, they said.

"Our bank is looking to integrate climate considerations into its lending decisions to aid decarbonization," a Singapore-based source said.

Fuel levies for commercial shipping firms to reduce their carbon usage would also help, another source in Singapore said. However, the implementation and the means to administer it might turn out to be quite complex, he added.

In a bid to cut GHG emissions, the global maritime transport industry has submitted a proposal to form the world's first collaborative shipping R&D program, the International Chamber of Shipping, or ICS, had said on its website December 2019.

The proposal include core funding from global shipping companies of about $5 billion over a 10-year period, the ICS said in December.

"$2 a tonne will generate about 5 billion dollars over a ten year period –- based on total fuel consumption by the world fleet of about 250 million tonnes per year –- which we believe should be sufficient to accelerate the intensive R&D effort we need to fully decarbonize our sector within the ambitious timeline agreed by IMO," said Simon Bennett, ICS deputy secretary general, at the time.