LONG asset lifespans, high energy dependency and limited viable alternatives make shipping one of the harder-to-abate sectors to decarbonise, according to Fitch Ratings.
In a special report on long-term climate vulnerability, Fitch said that low margins mean there is a reluctance in shipping to heavily invest, especially into unproven technology, reported Hellenic Shipping News Worldwide.
In a business-as-usual scenario, Fitch estimates shipping could contribute around 10 per cent of global carbon emissions by 2050, where no adoption of new regulations that have an impact on energy efficiency or carbon intensity is assumed.
Fitch has assessed the shipping sector's vulnerability score as 40 by 2050, compared with 50 for airlines and 30 for road freight and logistics. The higher the score, the greater the vulnerability under the scenario.
For example, a sector with a score of 90 faces an existential threat from climate risks, whereas one with a score of 10 will face little disruption and may even benefit, the study said.
'We view the shipping industry's environmental regulation as less mature than that of the aviation industry, with a looser set target,' said Fitch.
'IMO has not implemented any market-based offsetting measure to fill the gaps in emissions curtailment until technology, operations and infrastructure measures provide long-term solutions,' the study said.
Fitch notes the key regulations to encourage greater shipping efficiency are the Energy Efficiency Design Index and the Ship Energy Efficiency Management Plan.
Remarking on the non-legally binding nature of the IMO's initial strategy on reducing the GHG emissions, Fitch said it does not set out an absolute CO2 emission reduction milestone target up until 2050.
'Considering the ships have lifespans of 20-30 years, 2050 is one ship lifetime away. Fitch expects more concrete and perhaps tougher regulation to be in place before 2030. The IMO's current decarbonisation plan is more lax than the Paris Agreement.'
If the shipping industry were to contribute equally to the Paris Agreement, it must emit no more than 17 gigatonnes (Gt) of CO2 to become carbon neutral, according to the International Energy Agency (IEA), while the IMO's target works to 28-43 Gt of CO2 emissions during 2015-2075.
Shipping is less visible than land transport or airlines from an end consumer's perspective, meaning it is less exposed to environmental scrutiny from society, despite its instrumental role to the world economic activities. This coupled with heavy debt burdens and low margins have made decarbonisation a secondary issue for the industry, Fitch said.
SeaNews Turkey
In a special report on long-term climate vulnerability, Fitch said that low margins mean there is a reluctance in shipping to heavily invest, especially into unproven technology, reported Hellenic Shipping News Worldwide.
In a business-as-usual scenario, Fitch estimates shipping could contribute around 10 per cent of global carbon emissions by 2050, where no adoption of new regulations that have an impact on energy efficiency or carbon intensity is assumed.
Fitch has assessed the shipping sector's vulnerability score as 40 by 2050, compared with 50 for airlines and 30 for road freight and logistics. The higher the score, the greater the vulnerability under the scenario.
For example, a sector with a score of 90 faces an existential threat from climate risks, whereas one with a score of 10 will face little disruption and may even benefit, the study said.
'We view the shipping industry's environmental regulation as less mature than that of the aviation industry, with a looser set target,' said Fitch.
'IMO has not implemented any market-based offsetting measure to fill the gaps in emissions curtailment until technology, operations and infrastructure measures provide long-term solutions,' the study said.
Fitch notes the key regulations to encourage greater shipping efficiency are the Energy Efficiency Design Index and the Ship Energy Efficiency Management Plan.
Remarking on the non-legally binding nature of the IMO's initial strategy on reducing the GHG emissions, Fitch said it does not set out an absolute CO2 emission reduction milestone target up until 2050.
'Considering the ships have lifespans of 20-30 years, 2050 is one ship lifetime away. Fitch expects more concrete and perhaps tougher regulation to be in place before 2030. The IMO's current decarbonisation plan is more lax than the Paris Agreement.'
If the shipping industry were to contribute equally to the Paris Agreement, it must emit no more than 17 gigatonnes (Gt) of CO2 to become carbon neutral, according to the International Energy Agency (IEA), while the IMO's target works to 28-43 Gt of CO2 emissions during 2015-2075.
Shipping is less visible than land transport or airlines from an end consumer's perspective, meaning it is less exposed to environmental scrutiny from society, despite its instrumental role to the world economic activities. This coupled with heavy debt burdens and low margins have made decarbonisation a secondary issue for the industry, Fitch said.
SeaNews Turkey