The international shipping industry needs a staggering $1.4 trillion in capital spending to cut emissions by 50 percent by 2050, according to a new report by UK maritime consultancy UMAS.
Funding has been identified as one of the top challenges in decarbonizing shipping, and the Climate Action in Shipping report suggests the industry needs to find ways to raise between $1 trillion and $1.4 trillion in capital to make it happen achieve the International Maritime Organization (IMO) decarbonization targets for 2050. At 87 percent, the majority of the investments would be required for upstream projects.
The IMO has adopted a strategy to reduce greenhouse gas (GHG) emissions from international ships with the goal of reducing total annual GHG emissions by at least 50 percent by 2050 compared to 2008 levels. Around 14 countries, including the US and UK, have set a more ambitious target of completely eliminating shipping emissions by 2050.
The report, which assesses progress towards the goal of scalable zero-emission fuels (SZEF) accounting for 5 percent of international marine fuels by 2030, finds that the industry is making progress towards carbon-neutral targets in areas such as technology and supply of SZEF and Funding power, politics and demand.
“Overall, there has been significant progress on commitments that are being translated into action through standards creation, transparency improvements and cross-value chain collaborations coming together for testing and piloting demonstrations,” the report said.
To bring industry on an ambitious 1.5°C zero-emissions trajectory, it needs to transition from using fossil fuels supported by the necessary technology and infrastructure to produce safe and SZEF, including distribution, storage and bunkering.
“Shipping is currently only in the very early stages of a fuel turnaround – the “emergence” phase. Several measures are required for a five percent uptake of SZEF via different levers of change and different actors,” it says.
Key targets in line with SZEF’s 2030 targets, where technology and supply advances have been made, include 20 major ports now offering SZEF bunkers, investment in at least 210 production facilities and new vessels that will be either dual- Fuel or SZEF capable.
In terms of funding, the industry must commit to investing around $40 billion annually in SZEF bunker and production facilities through 2030. Progress has been made in ship financing, most notably through the development of the Poseidon Principles, which have 28 signatories and account for over 50 percent ($185 billion) of ship debt financing.
Demand has seen progress as major freight buyers in the container sector commit to buying five million TEU zero-emissions freight by 2030.