Shipping will need far greater collaboration, both among existing players as well as with governments and land-based business partners, to work out how it pays for the transition necessary to meet the 2050 decarbonisation goals set out by the International Maritime Organization (IMO).
Following on from yesterday’s news that at least $1trn of capital investment in land-based and ship-related infrastructure will be required to halve international shipping’s greenhouse gas emissions by 2050 compared to 2008 levels, a host of shipping experts have urged for swift collaboration across the maritime supply chain to pay for this switch in a timely manner.
A new study released yesterday by UMAS and the Energy Transitions Commission for the Getting to Zero Coalition put a dollar figure on the challenge that lies ahead for shipping over the next three decades.
Depending on the production method, the cumulative investment needed between 2030 and 2050 to halve shipping’s emissions amounts to approximately $1-1.trn, or an average of $50bn to $70bn annually for 20 years. If shipping is to fully decarbonise by 2050, this will require further investments of some $400bn over 20 years, bringing the total to $1.4trn to $1.9trn.
Reacting to the report, UK Chamber of Shipping chief executive Bob Sanguinetti told Splash today: “We have been clear that industry, government and others need to formulate new plans and co-ordinate work better to tackle climate change and now we can see the scale of the challenge. Only by working together through increased collaboration and more joined up thinking will we develop the infrastructure and technology needed to ensure we meet our climate change targets.”
Anne Steffensen, CEO at Danish Shipping, said the “big numbers” involved in the report clearly shows that shipping can’t do this transformation alone.
“The way towards zero emission in shipping requires a paradigm shift in the energy sector and that will need at strong collaborative effort across sectors,” Steffensen said.
The biggest share of investments, according to yesterday’s report, which made headlines around the world, is needed in the land-based infrastructure and production facilities for low carbon fuels, which make up around 87% of the total. This includes investments in the production of low carbon fuels, and the land-based storage and bunkering infrastructure needed for their supply.
Only 13% of the investments needed are related to the ships themselves. 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.
The 13% figure cited in the report came in for criticism by a number of people contacted by Splash today.
Michel van Roozendaal, president of Scandiavian ship equipment manufacturer MacGregor, said the 13% figure was wrong.
“At the end of the day, the ship is where the actual emissions are taking place. The opportunity is in making shipping a more technically sophisticated industry where innovation will have a real impact waking up this industry that lags perhaps 50 years behind what is now technically available and which is having a lot of waste in the system,” van Roozendaal said.
“Applying low GHG fuels only gets you so far. Let us also focus for example on electrification for short journeys, using other means of propulsion and further automation eliminating waste in the system,” van Roozendaal suggested.
Di Gilpin, who heads the Smart Green Shipping Alliance, also took issue with the majority of spending going towards land-based infrastructure.
“Zero emission fuels are essential for fleet decarbonisation but transferring responsibility to land-based actors exposes the sector to multiple price, availability and quality risks,” she said, adding: “The transition to low sulphur fuels underlines that.”
Gilpin described the headline grabbing $1trn figure in yesterday’s report as an “eye-watering sum of money”, with other studies suggesting the actual sum could be even higher.
“To mobilise that amount of capital will take enormous corporate and political courage – we have been woefully short of that over the last few decades,” Gilpin said.
Dr Tristan Smith, reader at the UCL Energy Institute and one of the author’s of yesterday’s report, told Splash the eventual numbers involved could be less than feared.
“Normally, when academics make estimates for future costs/prices of technology transitions they are proved wrong for overestimating rather than underestimating, because its so hard to foresee the impacts of innovation and the creativity of the markets for achieving cost reductions,” Smith said.
Greg Atkinson, chief technology officer at Japan’s Eco Marine Power, commented that yesterday’s report serves a wake-up call for the sector, and that a complete overhaul of operations will be required.
“Shipping will need to fundamentally change to meet the IMO’s greenhouse gas emission reduction target and this includes not only ramping up investment in new technologies, alternative fuels and low emission propulsion systems but also changing how companies operate and manage their fleets,” Atkinson said.
Splash columnist Nick Chubb, who founded maritime innovation consultancy Thetius last year, argued today that the IMO might struggle to engage the land-side of the decarbonisation challenge.
“The most important take away for me here is that the IMO has enacted a policy that requires massive investment in an industry over which it has no jurisdiction,” Chubb said, pointing out how the last two years’ preparation for the sulphur cap saw the refining industry not cope well in readying and communicating its changing fuel mix.
“Making the decarbonisation of shipping work at scale will require a joined up approach across multiple industries, something which we are traditionally not very good at,” Chubb warned.