The Getting to Zero Coalition, with a goal to decarbonize the shipping industry, released a report Tuesday about how different policy measures could aid in making zero-emissions shipping commercially viable.
The World Economic Forum, the Global Maritime Forum and Friends of Ocean Action are members of the Getting to Zero Coalition. The report was created in partnership with maritime consultancy UMAS.
On its current path, projections estimate that shipping-related greenhouse gas emissions will increase by 90% to 130% by 2050, compared to 2008-level emissions. The International Maritime Organization set a target to reduce emissions by at least 50% by 2050, and several shipping companies have set net-zero emissions targets for 2050 or sooner.
Read: Maersk moves up net-zero emissions goal by decade
How will the industry meet these targets given the projected growth in emissions?
The “closing the gap” report explored the “urgent need for policy to close the competitiveness gap” and make zero-emission fuels more affordable compared to conventional shipping fuels.
“The IMO has a long history of considering policy to address GHGs, yet little has been achieved to date,” the report noted.
Two carbon pricing pathways were modeled: one in which emissions were reduced 50% by 2050 compared to 2008 and one in which emissions were reduced to zero by 2050. Both pathways show emissions peaking in 2030 and rely on carbon pricing that begins at $11 per metric ton in 2025.
The average carbon price is $173 per ton throughout the 50% emissions-reduction scenario and $191 per ton throughout the 100% reduction scenario. But the carbon prices would reach $264 and $360 in the two scenarios by 2050. That number may seem extreme, but the effects of climate change and a lack of action to reduce emissions also have extreme consequences.
According to the report, the path to decarbonization could go smoother if the initial price on carbon was set higher than $11 to ease “potential economic shocks of sharp price increases.” It said the same amount of reductions in emissions could be achieved with lower carbon prices if the funds collected were redirected toward subsidizing the deployment of zero-emissions fuels and technologies.
“The timing and speed of the transition will be important for the ease and costs of shipping’s decarbonization. In a sector like shipping where both ships and landside assets will see major changes in fundamental technologies/design within a fraction of their economic lifetime, an earlier transition will allow more gradual changes, thereby reducing the risk of significant disruptions of the sector and of asset stranding,” the report said.
Other regulatory measures such as performance, emissions, technology or product standards could also help reduce emissions. Performance or emissions standards are the least restrictive in the sense that they do not dictate which technologies or techniques are used to meet the standards.
Because standards do not collect revenues like carbon prices do, it could be more difficult to ensure a transition to lower emissions technologies is equitable.
Read: Why is reducing emissions in freight so hard?
Social sustainability and equity
Aside from reducing emissions and being cost effective, shipping fuels of the future must also be equitable to be sustainable.
“Decarbonization policy for shipping needs to be as much about equity and fairness as it is about climate change mitigation. Vast inequalities exist globally, many of which are worsening in the face of climate change. With careful policy design and use of carbon pricing revenues, we can ensure that maritime climate policies do not exacerbate these inequalities,” Isabelle Rojon, principal consultant at UMAS and lead author of the report, said in a release.
“Furthermore, embedding equity into policy measures will help secure the multilateral agreement that is urgently needed,” Rojon said.
Voluntary initiatives with a purpose to reduce emissions in shipping are unlikely to result in disproportionately negative impacts on certain companies or regions, the report said. They may instead result in positive competitive advantages for early movers to zero-emissions fuels and technologies.
“This year will be critical for decisions on climate policy in the IMO. Our report shows that there is no single perfect policy and that a successful transition will likely hinge on developing and deploying a mix of policies which can address different aspects of the transition. … The sooner policymakers can surmount this challenge together, the better for the transition, the industry and the environment,” Alison Shaw, research associate at UCL and co-author of the report, said in the release.
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