Shipping is considered a hard-to-abate sector. Global freight demand is estimated to triple between 2015 and 2050 based on the current demand pathway. By some forecasts, its GHG emissions are also expected to grow by the same amount by mid-century. Decarbonising in line with the goals of the Paris Agreement will require the sector to reduce its reliance on fossil fuels.
Alternatives, such as hydrogen-based fuels, are not currently available at the scale needed, so low-carbon biofuels must play an important role in existing vessels. Renewable Diesel (HVO) is the most promising commercially ready drop-in biofuel. But price and production may struggle to compete with fossil fuels without regulatory support.
A blended solution would ensure that currently available solutions are used more now, while investment is made in zero-carbon fuels of the future. Given how hard to abate sector emissions are, shipping could be a significant source of demand for carbon credits.
1. Industry-wide decarbonisation by 2050 in line with the Paris Agreement is expected to cost the maritime sector an estimated US$1.2 to $1.6 trillion.
2. In the long term, liquified hydrogen and hydrogen carriers, such as green ammonia and green methanol, are expected to cover over 60% of the sector’s total fuel consumption.
3. Incentives are likely required for advanced biofuels, made from waste streams, to play an intermediate role in the net zero transition of shipping while investment is made into developing long-term zero-emission solutions.
To sign up to updates from BeZero Carbon, including ratings, events and insights, click here.