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At least $1trn needed to meet shipping’s 2050 decarbonisation goals

A new study says it will cost at least $1trn to meet the shipping industry’s 2050 decarbonisation goals, much of it for land-based infrastructure and production facilities.

The study by UMAS and the Energy Transitions Commission for the Getting to Zero Coalition found that the cumulative investment required to meet the challenge of halving shipping’s emissions between 2030 and 2050 was $1trn - $1.4trn. This equates a massive $50bn - $70bn annually over a 20 year period.

Much of this figure is not for new or retrofitted ships though, which account for just 13% of total figure, but rather the landside supply infrastructure and production of new fuels which would account for 87% of the required infrastructure.

While the numbers may seem enormous it was stressed that need to be seen in the context of annual global energy investments.

“The investment needed should be seen in the context of global investments in energy, which in 2018 amounted to $1.85 trillion. This illustrates that shipping’s green transition is considerable, but certainly within reach if the right policy measures are put in place,” said Johannah Christensen, managing director, head of projects & programmes at the Global Maritime Forum, a partner of the Getting to Zero Coalition.

Should shipping aim to fully decarboniae by 2050 this would add a further $400bn in investment bringing the total to $1.4trn - $1.9trn. The scale of capital required over the coming 30 years means a much quicker investment cycle than shipping is used to.

“Energy infrastructure and ships are long-life capital-intensive assets that normally evolve slowly. In the next three decades however, our analysis suggests we will see a disruptive and rapid change to align to a new zero carbon system, with fossil fuel aligned assets becoming obsolete or needing significant modification,” Tristan Smith, reader at the UCL Energy Institute.

“Even though regulatory drivers of this system change such as carbon pricing are only starting to be debated, the economic viability of today’s investments and even the returns on recent investments will be challenged, and the sooner this is factored in to strategies and plans, the better.”

At the Global Maritime Forum summit in Singapore last year a carbon levy should be $10 per ton CO2, and $50-$75 per ton CO2 around 2030 was proposed by maritime leaders. At the $75 per ton level this would correspond to a $70bn annual fund.

However, a proposal by proposal put forward by the International Chamber of Shipping (ICS), Cruise Lines International Association (CLIA), Bimco, Intercargo, Intertanko, Interferry, World Shipping Council (WSC), and International Parcel Tankers Association to the IMO would be based on a levy of just $2 per tonne resulting in a $5bn R&D fund over 10 years.

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