Transportation - Shipping Industry

The shipping industry, which delivers 90% of global trade, contributes almost 3% of global greenhouse gas emissions annually. Understanding this, the industry is attempting to meet the 1.5°C goals of the Paris Agreement by 2030 with zero-emission fuels making up 5% of international shipping fuel. Moreover, the International Maritime Organization (IMO) has set a target to reduce shipping emissions by 50% compared to 2008 rates by the year 2050.

FUEL TRANSITION

This transition comes in three stages. First is the initial emergence, in which innovation escalates Scalable Zero-Emission Fuels (SZEF) to make up 5% of international shipping fuels by 2030. Second is diffusion, where the new fuel increases its market share and price competitiveness relative to the existing one. Last is the reconfiguration stage, in which the new power source reaches market dominance.

FIVE DISTINCT SETS OF CHANGE LEVERS AND PROGRESSION

The primary challenge at the moment is shifting from commitment to investment and infrastructure development. Shipping is currently in the emergence phase, and five distinct sets of change levers will aid its progression from emergence to diffusion to reconfiguration.

• Technology/supply: infrastructure development, fuel production, and innovative systems that will expand the usage of new fuel.

• Civil society: enhancing participation in new fuel as increasing NGO pressure and upskilling workforce.

• Finance: a financial mechanism to support R&D.

• Demand: demand for carbon-free shipping, including establishing zero-carbon routes and zero-emission freight commitment across all shipping segments.

• Policy: international agreements on creating zero-carbon shipping routes and procedures motivating countries to provide domestic shipping decarbonization.

WHAT HAS BEEN DONE?

With IMO developing short-term measures and emissions pricing, policy developments are progressing. This accelerates the increased visibility of many initiatives and civil society development. For example, A.P. Moller – Maersk, a Danish shipping conglomerate, is adapting its strategy. The firm is moving away from fossil fuels and exploring alternative energy sources such as fuels made from renewable electricity or biomaterials. Apart from that, it invests and secures agreements with fuel providers and aligns its finance strategy with the decarbonization strategy.

The shipping industry has clarified its intentions in leading the transition to a more equitable, healthy, and resilient carbon-neutral world, signaling to strengthen cooperation and accelerate and shift action commitments. The crucial modification will only be possible with solid collaboration across the shipping value chain and the value of public-private partnerships working together to drive the necessary shift at all levels.

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