The dilemma of shipping
If the world is to achieve the goals of the Paris Agreement to tackle climate change, sectors such as shipping must act fast, but how do they balance the need for change with the cost of change?
Behind Decarbonising Shipping: All Hands On Deck report lies a significant dilemma for the shipping industry. Shipping is vital to the global economy and never more so than during the global pandemic, keeping up the supply of essential goods. It accounts for about 80% of the volume of global trade and it is one of the hardest industries in which to cut carbon emissions. If the world is to achieve the goals of the Paris Agreement to tackle climate change, sectors such as shipping must act fast, but how do they balance the need for change with the cost of change?
The International Maritime Organization (IMO) has set the ambition of reducing the shipping industry’s greenhouse gas emissions by at least 50% by 2050 compared to 2008, and reducing the carbon intensity of emissions by 40% by 2030, and 70% by 2050 compared to 2008 levels. The urgency is clear, but the total cost of decarbonisation has been estimated as $1.65 trillion by 2050.
The scale of the challenge means that any solution needs to involve every aspect of shipping. This joint report by Shell and Deloitte captures views across the industry, from CEOs to financiers and ship builders, and it uses those to propose 12 practical potential solutions.
The report identifies considerable barriers. The industry requires substantial investment, its assets are vessels with long lifespans of 20 to 30 years and they are dependent on heavy fuels. There is no ready alternative fuel that can power vessels with one easy switch.
Electric ships may be an option for inland and short sea routes but there is no viable option yet for deep-sea shipping, which accounts for about 85% of emissions. According to the report, liquefied natural gas will have a role to play but will not be enough on its own to reach the IMO target for 2050. Biofuels are the most promising in terms of adopting a fuel but are difficult to produce at the scale needed. Alternatives include hydrogen and ammonia, but they are currently more expensive than today’s fuels, and greater quantities are needed to produce the same energy, creating challenges around storage and transporting it for the existing fleet.
In addition, there is little global alignment in regulation, a lack of infrastructure to support lower-carbon fuels at significant scale and limited demand for those fuels from shipping customers. As the report puts it: “It is a complex and expensive endeavour.” This is shipping’s dilemma, but if the scale is daunting, one shipping CEO says that the industry had never been more united.
FIND OUT MORE
The dilemma for the shipping industry is the balance between the need for change and the cost of change.
The scale of the challenge to cut carbon emissions in the shipping industry requires urgent action on many fronts and across the whole industry.
Read the latest report “Decarbonising Shipping: All Hands on Deck” which outlines industry perspectives on how to accelerate decarbonisation of the shipping sector.