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Closing the Gap Zero-Emission Fuel Transition in Shipping

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Charley Rattan's picture
World Hydrogen Leader Charley Rattan Associates

UK based offshore wind & hydrogen corporate advisor, broker and trainer; Faculty member World Hydrogen Leaders. Delivering global hydrogen and offshore wind corporate investment brokerage....

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  • Jan 25, 2022
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Shipping is a cornerstone of global trade and, as such, the GHG emissions created by shipping are significant and rising, accounting for almost 3% of global anthropogenic emissions (Faber et al. 2020a). Recent projections suggest that by 2050, shipping emissions will increase by between 90- 130% of 2008 emissions by 2050 (ibid.). However, in April 2018, the IMO adopted the Initial GHG Strategy which set the ambition to reduce total annual GHG emissions by at least 50% by 2050, while pursuing efforts towards phasing out GHG emissions this century as a matter of urgency, consistent with the Paris Agreement temperature goal. With emissions projected to rise and international targets having been set, the question becomes, how these targets can be met by shipping?

For international shipping to align with the IMO’s Initial GHG Strategy, zero-emission fuels would need to become the dominant fuel source by the 2040s, gradually phasing out current fossil fuels. However, there exists a significant competitiveness gap between incumbent fossil fuels and alternative zero-emission options. This gap is the result of the existence of market barriers and failures, availability issues, a relative lack of information and regulation on safety, as well as the price difference in the fuels, which in turn is driven by R&D, infrastructure, and investment requirements. Projections suggest that across the 2030s and 2040s, zeroemission fuels will be approximately double the price of conventional fuel at best (Lloyd’s Register & UMAS 2020). As a result, there is an urgent need for policy to close the competitiveness gap and ensure shipping meets its decarbonisation commitments.

There is a range of potential measures to promote decarbonisation in shipping, including economic instruments or MBMs, direct regulatory approaches, information policies, voluntary initiatives, and national and regional action. This report provides an overview of different policy measures to address maritime decarbonisation and to close the competitiveness gap while enabling an equitable transition. Fairness and equity aspects are emphasised by e.g. the Initial IMO GHG Strategy. Therefore, the viability of any IMO climate policy instrument depends to a large extent on how these aspects are considered and operationalised.

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