G7 calls for quicker pace of maritime, aviation decarbonization

G7 countries have renewed their calls for more aggressive decarbonization of the international maritime transportation and aviation sectors, while suggesting a switch to sustainable fuels would be key to success.

Shipping and aviation are two hard-to-abate sectors that each account for 2%-3% of global carbon emissions, analysts and industry participants said, with the difficulty of electrification of energy sources in long-haul trades.

In a communique issued after a ministers' meeting on climate, energy and environment in Japan April 15-16, the G7 reiterated its pledge for life cycle zero emissions from international shipping by 2050 and fresh intermediate emission targets for 2030 and 2040 at the International Maritime Organization.

The IMO, UN's shipping agency, has currently aimed to reduce the carbon intensity of international shipping by 40% by 2030 and halve emissions by 2050 against 2008 baselines.

The G7's statement has come before IMO member states are expected to finalize new emissions targets and regulations in the 80th Marine Environment Protection Committee meeting July 3-7.

G7 members also said they aim to establish at least 14 "green corridors"—trade lanes where low-carbon bunker fuels are available—among themselves while committing to support similar initiatives worldwide to "promote the reduction of [greenhouse gas] emissions through the uptake of zero- and near-zero emission vessels and fuels and the development of decarbonized ports."

Analysts expect the uptake of low-carbon marine fuels to increase slowly in the coming years, with high costs and low availability likely to remain the main challenges.

In its reference case, S&P Global Commodity insights predicts the share of low-carbon supplies in global bunker consumption will grow to 2.2% in 2030 from 0.2% in 2021.

Platts bunker assessments for 0.5%S fuel oil, the world's most common type of marine fuel, were $14.195/Gj in Rotterdam April 14, according to S&P Global data. This is compared with $16.847/Gj for fossil methanol. Based on industry estimates, green methanol would be at least two to three times more expensive.

Net-zero aviation

In June 2022, the International Civil Aviation Organization—UN's agency for air transportation—pledged to achieve net-zero carbon emissions from the aviation sector by 2050.

G7 ministers said they committed to accelerate global efforts to achieve the midcentury goal with the Carbon Offsetting and Reduction Scheme, currently the only global market-based measure applying to CO2 emissions from international aviation.

"To achieve this goal, we will work across sectors and make an effort for promoting and introducing sustainable aviation fuel" among other means, the G7 said.

Under CORSIA, airlines based in ICAO member states need to reduce emissions by introducing SAF, utilizing low-carbon technologies, improving operations, and buying carbon credits.

According to ICAO, over 100 countries are voluntarily participating in CORSIA. Russia, China, and India have not yet joined CORSIA, but with a few exceptions, many countries, including these three, will have the obligation from 2027.

The premium of SAF to fossil-based jet fuel was assessed at $854.85/mt in Europe April 14, according to Platts' assessment. The Platts CEC assessment, which reflects CORSIA-eligible standardized contracts for carbon credits, was $1.90/mtCO2e April 17.