The shipping and energy sectors will need to spend at least $1 trillion to meet a target of substantially cutting carbon dioxide emissions from ships by 2050, according to a new study.
University Maritime Advisory Services, a consulting firm affiliated with University College London, and the Getting to Zero Coalition, a partnership between the industry-funded Global Maritime Forum and the World Economic Forum, said an average of at least $50 billion a year will be needed from 2030 to 2050 to reach the International Maritime Organization’s goal of reducing carbon emissions by half from 2008 levels.
The figure is the first estimate of the cost of what the IMO and owners say will be the biggest and most expensive change in the industry since ships switched from burning coal more than a century ago.
The study said 87% of the investment will be needed for the production of new fuels and the storage and bunkering facilities for refueling ships at ports.
Several ship operators in Europe and Japan are testing new propulsion systems that run on biofuels, ammonia, hydrogen and batteries, among others. They have said a big challenge is narrowing down the list of possible new fuels so that investment can focus on mass production, fuel facilities and new ship engines and hull designs.
Ships and energy infrastructure are capital-intensive assets with long lifespans, meaning any changes are time-consuming and expensive. Costs are usually passed down to cargo owners, like giant U.S. retailers, and are passed along supply chains.
In the next three decades, “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,” said Tristan Smith, reader at the University College London’s Energy Institute, who co-wrote the report.
“Even though regulatory drivers of this system change such as carbon pricing are only starting to be debated, the economic viability of investments will be challenged, and the sooner this is factored in to strategies and plans, the better.”
In a first step toward making the industry compliant with the commitments of the 2016 Paris climate accord, oceangoing vessels this month began using new low-sulfur fuels that will cut emissions by more than 80%. Operators have said the sulfur reduction alone will add around $50 billion in new fuel costs over the next three to four years.
Ships contribute around 3% of the world’s sulfur dioxide gases, a share comparable to that of a country roughly the size of Germany.
Some operators in Europe are testing liquefied natural gas to power their ships. But UMAS last summer called a European Union proposal for a $500 million investment in LNG infrastructure a “climate dead-end” because natural gas is carbon-intensive to produce and produces other toxic emissions such as methane when burned.
Write to Costas Paris at [email protected]
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