Context:
The United Nations Conference on Trade and Development (UNCTAD) has published the Review of Maritime Transport 2023, focusing on the problem of greenhouse gas (GHG) emissions in international shipping and the difficulties associated with decarbonizing the industry.
Relevance:
GS II: International Relations
Dimensions of the Article:
- Key Highlights of the Review on Global Shipping and GHG Emissions
- UNCTAD’s Recommendations for Economic Incentives in the Shipping Industry
Key Highlights of the Review on Global Shipping and GHG Emissions
GHG Emissions and Industry Significance
- Greenhouse gas (GHG) emissions from international shipping have increased by 20% in 2023 compared to a decade ago.
- The shipping industry plays a crucial role, contributing to over 80% of the world’s trade volume and accounting for nearly 3% of global GHG emissions.
Shipping Volumes and Trade Projections
- Global maritime shipping volumes experienced a slight 0.4% decline in 2022 due to disruptions in global supply chains caused by the Covid-19 pandemic.
- However, a growth rate of 2.4% is anticipated in 2023.
- Containerized trade is expected to increase by 1.2% in 2023 and further by 3% between 2024 and 2028.
- Oil and gas trade volumes showed robust growth in 2022.
Age of Commercial Ships
- In January 2023, the average age of commercial ships was 22.2 years, with over half of the world’s fleet exceeding 15 years in age.
- The increasing average age of the global fleet raises concerns about the availability and cost of alternative fuels, as well as the higher cost of ships capable of using them.
Challenges for Fleet Renewal
- Ship owners face challenges in renewing their fleets without clear guidance on technology and regulatory frameworks.
- Port terminals also encounter similar challenges, particularly regarding investment decisions.
Fuel Usage and Transition to Alternative Fuels
- The majority, 98.8%, of the global fleet utilizes conventional fuels such as heavy fuel oil, light fuel oil, and diesel/gas oil.
- Only 1.2% of the fleet employs alternative fuels, primarily LNG, LPG, methanol, and to a lesser extent, battery/hybrid technology.
- Progress is evident, with 21% of vessels currently on order designed to operate on alternative fuels, notably LNG, LPG, battery/hybrid systems, and methanol.
Investment and Decarbonization
- Achieving full decarbonization of the world’s fleet by 2050 may necessitate annual investments ranging from USD 8 billion to USD 90 billion.
- Full decarbonization could potentially double yearly fuel costs, underscoring the importance of a just transition for the sector.
IMO Targets and Strategies
- The International Maritime Organization (IMO) has set a goal to achieve net-zero GHG emissions by around 2050.
- The 2023 IMO GHG Strategy aims to achieve at least a 5-10% uptake of zero or near-zero GHG fuels by 2030 as part of the industry’s decarbonization efforts.
UNCTAD’s Recommendations for Economic Incentives in the Shipping Industry
Suitable Fuels for Dual-Fuel Engines
- Renewable ammonia and methanol fuels are considered more suitable for newer ships equipped with dual-fuel engines.
Sustainability Criteria for Marine Fuels
- Sustainable marine fuels should achieve zero or near-zero carbon dioxide equivalent emissions throughout their life cycle, from production (well) to utilization (wake).
Promoting Collaboration and Investment
- UNCTAD emphasizes the importance of collaboration across the shipping industry and regulatory bodies.
- Swift regulatory interventions and increased investments in green technologies and fleets are recommended.
Economic Incentives
- Economic incentives, such as levies or contributions tied to shipping emissions, can enhance the competitiveness of alternative fuels.
- These incentives also support investments in climate-resilient infrastructure, facilitating the transition to cleaner shipping practices.
Balancing Environmental Goals and Economic Needs
- UNCTAD acknowledges the need to strike a balance between environmental objectives and economic imperatives.
- However, it underscores that the cost of inaction in addressing environmental concerns far exceeds the investments required for sustainability.
Digital Solutions for Efficiency and Sustainability
- Beyond cleaner fuels, the shipping industry should expedite its adoption of digital solutions like artificial intelligence (AI) and blockchain to improve operational efficiency and sustainability.
-Source: Down To Earth
