The United Nations Conference on Trade and Development (UNCTAD) has issued a stark warning, stating that an additional $8 billion to $28 billion annually will be required to decarbonize the global shipping sector by 2050. Furthermore, substantial investments ranging from $28 billion to $90 billion annually will be necessary to develop infrastructure for 100% carbon-neutral fuels by the same deadline.
The report, presented ahead of World Maritime Day on September 28, emphasizes that full decarbonization could lead to a 70% to 100% increase in annual fuel expenses. This substantial cost escalation poses a particular challenge for small island developing states (SIDS) and least developed countries (LDCs), which heavily rely on maritime transport for their economies.
Maritime transport accounts for over 80% of the world’s trade volume and contributes nearly 3% of global greenhouse gas emissions. Shockingly, emissions from this industry have surged by 20% in just a decade.
UNCTAD Secretary-General Rebeca Grynspan stressed the need for immediate decarbonization while ensuring economic growth. The organization advocates for a transition strategy that is environmentally effective, procedurally fair, socially just, technologically inclusive, and globally equitable, particularly in the run-up to the United Nations climate conference (COP28) in November.
The report underscores the importance of system-wide collaboration, rapid regulatory interventions, and substantial investments in green technologies and fleets. While the transition to cleaner fuels is still in its early stages, promising developments include 21% of vessels on order being designed for alternative fuels.
To ensure an equitable transition, UNCTAD calls for a universal regulatory framework applicable to all ships, regardless of their registration flags or ownership, to avoid a two-speed decarbonization process and maintain a level playing field.
Additionally, UNCTAD highlights the aging global shipping fleet, with the average age of commercial ships reaching 22.2 years at the start of 2023. More than half of the world’s fleet is over 15 years old, posing challenges for ship owners and port terminals in making vital investment decisions amidst the evolving landscape of alternative fuels and regulatory regimes.
Digitalization is identified as a key enabler of decarbonization efforts, offering enhanced efficiency and reduced delays. Technologies such as AI, machine learning, blockchain, and the internet of things can optimize performance in monitoring, routing, speed, and predictive maintenance.
Despite challenges such as the war in Ukraine and disruptions in global trade patterns, the shipping industry remains resilient, with anticipated growth in total maritime trade volumes and containerized trade in the coming years.
In conclusion, UNCTAD’s call for a just and equitable transition to a low- and zero-carbon future in global shipping highlights the urgency for system-wide commitment and regulatory action to address the escalating environmental challenges faced by the maritime sector. Timely and concerted efforts are essential to ensure a sustainable, resilient, and prosperous future for maritime transport.