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Shipping containers on ships in port

Shipping & the VCM: Charting a course for Paris

  • Louisa O'Connell
    Sales Specialist
  • Sofía Ordozgoiti
    Research Associate
To align with the Paris Agreement goal, international shipping needs to reduce its GHG emissions by up to 1.1 GtCO₂e by 2050 (using IMO analysis). To achieve this, strong international and national level regulations and policies may be needed, together with investment in low-carbon technology. IMO projections for the shipping sector demonstrate a significant opportunity for the Voluntary Carbon Market: to finance projects that are currently unfeasible, to incentivise lower-carbon decision making or to compensate for emissions that cannot yet be abated. By 2050, the VCM could help the sector to remove the residual 0.4 MtCO₂e unabated emissions in the IMO target scenario. Carbon ratings are a key tool to help the shipping industry to navigate the VCM.

Here are some key takeaways from the report

  • With shipping emissions projected to grow by up to 30% by 2050, incentives for Paris-aligned decarbonisation are needed at the global, national and corporate levels. 

  • Shipping industry targets imply significant residual emissions by 2050 - implying a large source of demand for VCM removal credits in the longer term. 

  • Carbon pricing could play an important role in decarbonising shipping (something the VCM can facilitate). Some estimates suggest a carbon tax of $150/tCO₂e may be needed.

Contents

  • 01 Context

  • 02 Current mechanisms for incentivising decarbonisation

  • 03 Role of the VCM in shipping decarbonisation

  • 04 Conclusion

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