International Shipping emissions increased by 20% in the last decade: UNCTAD

In 2023, greenhouse gas (GHG) emissions from international shipping were 20 per cent higher than 10 years earlier, according to the Review of Maritime Transport 2023 by the United Nations Conference on Trade and Development (UNCTAD).

Overall, the shipping industry contributes to over 80 per cent of the world’s trade volume and nearly three per cent of global greenhouse gas emissions.

Due to a crunch in global supply chains as a result of COVID-19, global maritime shipping volumes experienced a 0.4 drop in 2022. However, it is projected to grow by 2.4 per cent in 2023, the report said.

Containerised trade, which had declined by 3.7 per cent in 2022, is expected to grow by 1.2 per cent in 2023 and grow further by three per cent between 2024-2028. Oil and gas trade volumes showed robust growth in 2022, while tanker freight rates saw a strong revival driven by geopolitical events, the report stated.

UNCTAD Secretary-General Rebeca Grynspan said in a press statement, “Maritime transport needs to decarbonise as soon as possible, while ensuring economic growth. Balancing environmental sustainability, regulatory compliance and economic demands is vital for a prosperous, equitable, and resilient future for maritime transport.”

Early in January 2023, commercial ships were on average 22.2 years old and more than half of the world’s fleet is over 15 years old. As the average age of the world fleet is increasing, UNCTAD expressed concern that alternative fuels are not yet available at scale and are more costly, and the ships that can use them are also more costly than traditional ships.

Ship owners face the conundrum of renewing their fleet without clarity on technology and regulatory regimes, and port terminals also face similar challenges, particularly with regard to investment decisions.

As the transition to alternative fuels is still in its infancy, a total of 98.8 per cent of the global fleet in terms of number of vessels use conventional fuels such as heavy fuel oil, light fuel oil, and diesel/gas oil.

Only 1.2 per cent are using alternative fuels, mainly liquified natural gas (LNG), and to a lesser extent, battery/hybrid, liquified petroleum gas (LPG), and methanol, the report said.

Despite the conundrum faced by shipowners, progress is under way as 21 per cent of vessels currently on order are designed to run on alternative fuels, notably LNG, LPG, battery/hybrid and methanol.

Of the 21 per cent of vessels on order, LNG comprises 52.1 per cent, battery/hybrid: 39.9 per cent, LPG 5.5 per cent, methanol 3.4 per cent, and hydrogen 0.3 per cent.

In terms of active tonnage, nearly 6 per cent of the active fleet is operating on alternative fuels, mainly LNG, while one-third of the tonnage on order is designed to run on alternative fuels, the report said.

“It should be noted that while LNG may have a lower carbon footprint than heavy fuel oils, it remains a fossil fuel and faces problems such as methane slip and ‘well-to-tank’ emissions. As for batteries, these are more suited for use by vessels operating on shorter distances,” the report said.

On July 7, the International Maritime Organization set a target to achieve net-zero GHG emissions by around 2050. The 2023 IMO GHG Strategy also includes a commitment to ensure the uptake of alternative zero and near-zero GHG fuels by 2030. The Strategy provides that uptake of zero or near-zero GHG emission technologies, fuels, and/or energy sources should represent at least five per cent, striving for 10 per cent of the energy used by international shipping by 2030.

Bryan Comer, Ph.D., the Marine Program Lead at the International Council on Clean Transportation, told Down to Earth that renewable ammonia and methanol fuels are more suitable for the newer ships that have dual-fuel engines.

Moreover, “for these fuels to be sustainable, their emissions must achieve zero or near zero carbon dioxide equivalent emissions on a life-cycle ‘well-to-wake’ basis,” he said. “This would account for emissions from the full life-cycle of the fuel, including production, delivery, use, plus any emissions associated with direct or indirect changes to how land is used,” he added.

International regulation at the IMO, supplemented by regional, national, and local regulations elsewhere, is needed to drive the uptake of sustainable marine fuels, according to Comer.

As he explained to DTE, the IMO is revising its existing carbon intensity regulations for ships, with a deadline of January 1, 2026. These regulations are called the Energy Efficiency Existing Ship Index (EEXI), which limits the technical carbon intensity of the ship by limiting how much carbon dioxide the ship is designed to emit based on its size and ship type, and the Carbon Intensity Indicator (CII), which grades ships from A-E based on their operational carbon intensity, based on how much fuel the ships use each year.  

“Additionally, IMO is developing new regulations that the organisation is calling “mid-term measures.” These measures will include a technical element, most likely a Greenhouse Gas Fuel Standard (GFS), as well as an economic element, such as a carbon levy, a feebate system, or cap-and-trade. The IMO aims to agree on these measures by 2025 and have them enter into force in 2027,” Comer told DTE.

Estimates show that decarbonising the world’s fleet by 2050 could require $8 billion to $28 billion annually. The infrastructure for 100 per cent carbon-neutral fuels could need an even heftier $28 billion to $90 billion each year. If achieved, full decarbonisation could double yearly fuel costs, the UNCTAD report stated while calling for a bold just transition of the sector.

Shamika N Sirimanne, UNCTAD director of technology and logistics, said, “Economic incentives, such as levies or contributions paid in relation to shipping emissions may incentivise action, can promote the competitiveness of alternative fuels and narrow the cost gap with conventional heavy fuels. These funds could also facilitate investments in ports in SIDS and LDCs, focusing on climate change adaptation, trade and transport reforms, as well as digital connectivity.”

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