Decarbonisation of shipping industry comes with US$1 trillion price tag
A WHOOPING US$1 trillion is required to cut the shipping industry's greenhouse gas (GHG) emissions in half
A WHOOPING US$1 trillion is required to cut the shipping industry's greenhouse gas (GHG) emissions in half. The largest chunk of the funds is expected to be invested in land-based infrastructure and production facilities for low carbon fuels, land-based storage and bunkering infrastructure, accounting for 87 per cent of the total.
According to a study by University Maritime Advisory Services (UMAS) and the Energy Transitions Commission (ETC), the annual average investment needed would be $40-60 billion over the next two decades. Furthermore, to fully decarbonise the global shipping industry by 2050, an additional $400 billion of investment would be required over 20 years, bringing the total to $1.4-1.9 trillion.
'Our analysis suggests we will see a disruptive and rapid change to align to a new zero-carbon system, with fossil fuel aligned assets becoming obsolete or needing significant modification,' said lecturer Tristan Smith at University College London's Energy Institute.
Only 13 per cent of the investments needed are related to the ships themselves, which include the machinery and onboard storage required for a ship to run on low carbon fuels in newbuilds and, in some cases, for retrofits, reported Materials Handling and Logistics, Cleveland.
Ship-related investments also include investments in improving energy efficiency, which are anticipated to grow due to the higher cost of low carbon fuels compared to traditional marine fuels.
Given the majority of investment is on land, any research and development fund needs to enable deployment and scaling of the land-side, and not just work on equipment for ships.
The risk is that we get a fleet of zero-emission ships, no decarbonisation of fuel production (such as producing ammonia using natural gas) and then shift the emissions upstream. This means every stakeholder, including governments, fuel producers and ship owners have a stake and a responsibility in shipping's decarbonisation.
'We need to bring together the full range of upstream and downstream fuels value chains to unlock shipping's shift to zero-carbon energy sources. Done right, this represents a trillion-dollar market opportunity,' said Energy Transitions Commission chairman Adair Turner.