The Current Landscape
At the Global Maritime Forum’s annual summit in Athens, an analysis revealed that the world is not on track to meet the target of 5% zero emission fuels in international shipping by 2030. The assessment, conducted by experts from UMAS consultancy and the University College London Energy Institute, highlights the insufficient production of Scalable Zero Emission Fuels (SZEF) and the slow delivery of zero emission vessels.
The analysis shows that current production of SZEF is projected to meet only a quarter of the fuel demand by 2030. Although there will be 24 ships capable of running on SZEF, mostly methanol, by the end of 2022, this number falls well short of what is needed to meet the medium-term targets. With only one-fifth of the necessary orders in place, it is clear that demand and supply players need to work together to implement concrete solutions.
Katharine Palmer, Shipping Lead of the UN COP Climate Champions, emphasizes the need for demand and supply actors to work together to implement solutions. The shipping industry needs a coordinated effort to accelerate the development and deployment of zero emission fuels. Without the necessary scale and speed, the 5% target by 2030 is unlikely to be met.
The Industry’s Decarbonization Goals
The International Maritime Organization (IMO) plays a critical role in setting decarbonization targets for the shipping industry. In its revised Greenhouse Gas (GHG) Strategy, the IMO outlined a target of 5% zero emission energy in international shipping fuels by 2030, with a further target of 10% zero emission energy. These targets reflect the industry’s commitment to reducing greenhouse gas emissions and transitioning to a sustainable future.
To meet the 5% target, the industry would need approximately 5.3 million metric tons of hydrogen, 29.8 million metric tons of ammonia or 28.1 million metric tons of methanol to meet fuel demand in 2030. These figures highlight the scale of the challenge and the need for significant investment and innovation in zero emission fuel production.
Progress and Challenges
The past year has seen a positive shift in maritime decarbonization efforts. The industry has made progress in its commitment to zero-carbon fuels and cargoes. However, strong and rapid progress is needed to achieve the required scale-up of zero emission fuels in the energy mix. The shipping industry must seize the opportunity to accelerate the transition to a sustainable and decarbonized future.
Policy progress is critical to enable the scale-up of supply and demand for zero emission fuels. The IMO’s ambitious GHG reduction strategy and forthcoming global measures provide a framework for action. However, industry and national governments must make immediate efforts to stimulate supply and demand to ensure that the IMO strategy is ready to be implemented before 2030. Green corridors and national policies can play an important role in driving progress.
Financing is a critical component of achieving the industry’s decarbonization goals. The Poseidon Principles, which cover over $200 billion of shipping finance, demonstrate progress in aligning investments with climate goals. However, continued improvement in alignment is needed as requirements become more stringent. Incentivizing companies and investors to deploy zero-emission ships and cargo services is essential to achieving the breakthrough goal.
