PROGRESS towards reducing shipping greenhouse gas emissions is occurring but is likely to remain modest through to 2030, new research reveals.
The research, Climate Transition Trends: Global Shippers Chart A Complex Course, was prepared by S&P Global Ratings analysts Bryan Popoola and Terry Ellis.
It also notes the importance of technological innovation.
According to the report maritime shipping, “while highly fuel-efficient compared with other transport modes, remains a hard-to-abate sector due to its substantial energy consumption and emissions”.
The authors noted the sector accounted for about 11% of global transport-related emissions and 2% to 3% of total global greenhouse gas emissions, citing the International Council on Clean Transport as a source.
“More than 99% of shipping fuel is currently fossil fuel-based, and many companies have additional ties to the fossil fuel supply chain through the shipping and storage of oil, gas, and coal,” the report stated.
According to the authors, “a significant scale up of low-carbon fuel production is needed to decarbonise the maritime shipping sector”.
“The International Energy Agency projects that biofuels will account for half of all low-emission shipping fuel use in 2030,” the report states.
“Some biofuels are compatible with conventional engines, but further technological developments are needed to enable the development and adoption of other low-carbon fuels such as hydrogen and ammonia.”
The long operational lifetimes of existing vessels, typically around 25 to 30 years, is also expected to delay the sector’s decarbonisation, given the need for non-fossil combustion engines to use these fuels.
“We note that orders for new ships indicate a growing shift toward alternate fuels,” the authors stated.
According to the authors, almost all the companies assessed in the research relied heavily on vessels that used conventional, fossil-based shipping fuels.
The authors noted that the International Chamber of Shipping, energy products (coal, oil, and natural gas) accounted for about 36% of global seaborne trade in 2021, and more than 60% of oil produced globally was transported by ship.
“We view companies with significant exposure to transporting these fuels as having higher climate risk, given the inconsistency of these fuels with a low-carbon, climate resilient future,” the authors stated.