The maritime industry transports approximately 90% of global trade and emits approximately 2.5% of global greenhouse gas (GHG) emissions annually. It has long been recognized as the most cost-effective and energy efficient mode of transport.
However, as global trade continues to grow, shipping’s share of global GHG emissions will increase, and the maritime industry is examining how to manage its overall GHG emissions. In addition, with 40% of world seaborne trade related to the transportation of energy commodities, whether in the form of oil, coal or gas, the sector is also asking how global decarbonization efforts will impact the sector.
In 2018, the International Maritime Organization committed to reducing GHG emissions by at least 50% by 2050. The recent Global Maritime Issues Monitor reveals the key challenges in decarbonizing the maritime industry and the sector’s preparedness.
The research, released jointly with Marsh, the International Union of Marine Insurance, and the Global Maritime Forum, evaluated 8 different decarbonization risks on three dimensions: impact, likelihood of occurring in the next 10 years, and industry preparedness (figure below).
Energy efficiency and the choice of emission reduction technologies and strategies were ranked as having the highest impacts and likelihoods of occurring within the next 10 years. These results align with the sentiment that improving energy efficiency and choosing an emission reduction strategy are crucial first steps in decarbonizing the sector.
Survey respondents, however, felt least prepared to deal with non-fossil fuels. This likely reflects the challenge of adapting low-carbon technologies into an industry that has long been reliant on fossil fuels.
Overall, the industry considers its level of preparedness for decarbonization to be quite low – highlighting the uncertainty the industry faces. What emission strategy is best? How does the industry adapt to new technologies? What new regulations may come about as the world looks to decarbonize?
To meet the emissions reductions goal set forth by the IMO, the industry will need to begin answering these questions.
Exhibit 1: Key issues in decarbonizing maritime trade