Shipping sector’s decarbonisation by 2050 will come with a hefty price tag – UNCTAD
A UN agency warns that fully decarbonising shipping by 2050 will incur additional cost of around $8-28 billion/year and urges governments to implement economic measures to ease the financial burden.
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UN’s division of the Conference on Trade and Development (UNCTAD) reports that halving shipping emissions by 2050 could require an investment of approximately $1.4 trillion, while eliminating them completely is likely to require another $8-28 billion/year.
“Full decarbonization by 2050 will require massive investments and could lead to higher maritime logistics costs, raising concerns for vulnerable shipping-reliant nations like small island developing states,” UNCTAD says.
In its latest review of maritime transportation, UNCTAD finds that scaling up production, distribution and bunkering infrastructure of carbon-neutral fuels to meet global shipping demand by 2050 could need an annual investment of $28-90 billion.
“The more expensive energy sources and onshore investments could increase annual fuel costs by over $100 billion to $150 billion when fully decarbonized or incur a 70 per cent to 100 per cent increase from today,” UNCTAD notes.
It further points out that achieving 100% decarbonisation could double fuel costs in comparison with current levels.
“The urgency of decarbonization is evident, yet the sector faces multibillion-dollar investments amid uncertainty about the best transition methods,” says UNCTAD.
As a solution, it advocates economic measures such as carbon taxes or emissions trading schemes to mitigate the enormous costs associated with shipping decarbonisation. It suggests allocating a portion of the generated funds for alternative fuel production, storage, bunkering and distribution opportunities.
UNCTAD also warns that these hefty costs will most likely hit climate-vulnerable countries hardest, which could have an adverse effect on their economy. “The daunting price tag raises concerns, especially for small island developing states (SIDS) and least developed countries (LDCs), already burdened by higher shipping costs,” it says.
According to the report, some of the revenue generated through economic measures could also be used to build climate-resilient shipping infrastructure in low-income and climate-vulnerable countries.
Lastly, the report calls for global cooperation on green shipping corridors that would make green fuels more widely accessible and affordable for developing nations.
By Konica Bhatt
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