Decarbonized Shipping Comes With Substantial Costs Outlines UN Report

Credit: Smaart company

The UN body UNCTAD has called for a “just and equitable transition” to a decarbonized shipping industry in its Review of Maritime Transport 2023 launched ahead of World Maritime Day.

Push For Cleaner Fuel

UNCTAD, ahead of the United Nations climate conference (COP28) in November of this year, advocates for a shift towards cleaner fuels in shipping, emphasizing the need for an environmentally effective, procedurally fair, socially just, technologically inclusive and globally equitable transition strategy. The organization underscores the importance of system-wide collaboration, swift regulatory interventions, and robust investments in green technologies and fleets.

Decarbonization Costs Mount

However, the transition comes with substantial costs. UNCTAD reports that an additional $8 billion to $28 billion will be required annually to decarbonize ships by 2050, and even more substantial investments, ranging from $28 billion to $90 billion annually, will be needed to develop infrastructure for 100% carbon-neutral fuels by 2050. Full decarbonization could elevate annual fuel expenses by 70% to 100%, potentially affecting small island developing states (SIDS) and least developed countries (LDCs) that heavily rely on maritime transport.

Ageing Global Fleet

UNCTAD further expresses concern over the aging global shipping fleet – at the start of 2023, commercial ships were on average 22.2 years old, two years older than a decade ago. More than half of the world’s fleet is over 15 years old. Ship owners face the challenge of renewing the fleet without clarity regarding alternative fuels, green technology and regulatory regimes to guide ship owners and ports, while port terminals face similar challenges in vital investment decisions.

Shifting Global Trade

The Review of Maritime Transport analyzes the shifting global trade patterns and the impact of events like the war in Ukraine, highlighting the resilience of the shipping industry while acknowledging the challenges of balancing supply and demand. Driven by disruptions from the war in Ukraine, oil cargo distances reached an all-time high in 2022, and shipments of grain in 2023 have traveled further than in any year on record, as grain importing countries have been forced to seek alternative exporters such as the US and Brazil, which require long-haul shipping.

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Source: Shippingtelegraph