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Maritime shipping projected to triple by 2050. How will the industry decarbonize? | Greenbiz - GreenBiz

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Maritime shipping, ordinarily something of an "invisible industry," has been a hot topic ahead of this fall’s U.N. Climate Change Conference (COP26) in Glasgow, Scotland. A diverse array of stakeholders, including world leaders, financiers, NGOs, and shipping companies, have zeroed in on shipping as a critical target for decarbonization, given the sector’s importance for both global trade and the climate.

Ships carry around 90 percent of goods transported globally, and the shipping sector accounts for about 3 percent of the world’s greenhouse gas emissions today. But as international trade continues to swell, maritime trade volumes are projected to triple by 2050. Under a business-as-usual scenario, the climate footprint of the shipping industry could increase by as much as 250 percent by mid-century.

In the lead-up to COP26, the spotlight has been trained on shipping not only because it is a significant contributor to climate change, but also because it is a highly global sector that will require broad international agreement and coordination to decarbonize.

Shipping in the spotlight

The joint agenda for global action released at the conclusion of the recent G7 Summit mentions the need for zero-emissions shipping twice, in the context of both transport and heavy industry. The crossover reflects both the importance of shipping for international commerce and the challenge of decarbonizing the sector. Along with other energy-intensive industries such as cement, steel and aviation, shipping is considered "hard to abate," given its reliance on fossil fuel oil to power massive ships great distances across the world’s oceans.

Meanwhile, two smaller nations, the Marshall Islands and the Solomon Islands, have proposed a global carbon price for shipping. The island nations are especially vulnerable to climate-induced risks, and the Marshall Islands is a major shipping industry player, with thousands of ships sailing under its flag. Enacting a carbon price will not be easy, given the large number of countries involved and the likelihood of disagreement on what the "correct" price is. But such market-based measures, as they are known, could help level the playing field somewhat for clean fuels such as hydrogen or "green" ammonia, which is produced using renewable energy.

It is time to be clear that every sector needs to decarbonize by 2050. There is no exception.

Alongside the efforts of world leaders, movement toward shrinking shipping’s climate footprint is already taking place, led by the financial sector. Through the Poseidon Principles, signed in 2019, major banks that lend to the shipping sector have agreed to a framework for responsible maritime finance. The number of signatories to the Poseidon Principles has since grown to 27 financial institutions, which issued over $1.2 billion in sustainable maritime ship financing in 2020 and almost $1 billion more in the first half of 2021.

Infrastructure needs

As policy and financial instruments for decarbonizing shipping take shape, technological efforts have focused on switching from carbon-based shipping fuels to hydrogen-based fuels. The leading fuel candidate appears to be ammonia, a hydrogen-based fuel that emits no carbon dioxide when burned, and which can be created from air, water, and of course a whole lot of energy. Although it is toxic, ammonia is an appealing fuel option in part because the shipping industry has experience handling it — ammonia tankers already transport the chemical across the ocean. At least two manufacturers are developing ammonia-powered engines for shipping, according to the Financial Times, with delivery expected in the next few years.

Beyond driving demand for green fuels, perhaps a more significant challenge will be massively ramping up their production and making them available in ports across the globe. In a recent World Economic Forum panel discussion, Johannah Christensen of the Global Maritime Forum emphasized that "shipping’s decarbonization is not really done with the ships alone." Christensen added that research has shown that "around 90 percent of the investment needed to decarbonize shipping will be in land-based energy infrastructure," including the production and distribution of zero-emissions fuels.

The Getting to Zero Coalition, led by the Global Maritime Forum with the World Economic Forum and the Friends of Ocean Action, aims to put "commercially viable, deep-sea zero-emission vessels" into service by 2030. As Christensen noted, the coalition includes companies across the shipping value chain, from logistics giant Maersk to energy-sector companies that will be critical players in the transition. Coalition members include both incumbent producers of fossil fuels and new entrants seeking to bring green fuels to market. The coalition is part of the Mission Possible Partnership (MPP), of which RMI is a core partner. MPP, which launched earlier this year, brings together hundreds of companies with leading NGOs to speed the decarbonization of several hard-to-abate sectors, including shipping.

Getting onto the S-curve

Given the complexities of distributing fuel to the world’s myriad shipping ports and the number of fossil-burning ships already in service, the shift to zero-emissions fuels won’t happen with the flick of a switch. A recent insight brief published by Getting to Zero shows how it might be possible to put shipping in line with the goals of the Paris Agreement by decarbonizing just a subset of shipping routes and ship types at the outset.

The analysis finds that green maritime fuels need to reach 5 percent of the international fuel mix by 2030 in order to scale along an S-curve toward full decarbonization. That market share might be achieved by focusing on tankers that could run on ammonia, plus 10 large deep-sea routes, domestic shipping routes in a few dozen nations, and some niche international routes.

With COP26 approaching, the U.N.’s high-level climate champions are rallying shipping companies to join Maersk in the Race to Zero campaign and commit to the goals of the Paris Agreement. Even hard-to-abate industries such as shipping must decarbonize if the world is to limit temperature rise to 1.5 degree C and avoid the worst effects of global warming. As Peder Osterkamp, shipping lead for the COP26 Climate Champions, told the trade publication Lloyd’s List, "It is time to be clear that every sector needs to decarbonize by 2050. There is no exception."

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