Established by experienced shipowners and managers, Pelagic Partners is a board member at Golden Energy Offshore Services, a world-leading company that specializes in providing a modern, flexible, and energy-efficient fleet serving the oil and gas and renewable offshore industry. This article will explore the role of the shipping industry in the global energy transition and how the maritime sector can help lead the way in the race to net zero.
The Shipping Industry’s Role in Mitigating Climate Change
For hundreds of years, the global shipping industry has been integral to global trade. According to research by UNCTAD, the shipping industry transported a staggering 80% of goods by volume worldwide in 2021 alone. Energy products accounted for 36% of global seaborne trade, with 64% of oil, 17% of natural gas, and 15% of coal transported by ship, research from Clarksons reveals.
Scientists all over the world agree that keeping global temperature increases below 1.5˚C is integral to mitigating the worst impacts of climate change. Even a 1˚C rise has impacts on nature and humanity that are already extensive and growing. However, experts warn that the risk of multiple climate tipping points increases exponentially between 1.5˚C and 2˚C.
Pathways to Net-Zero: Shaping the Global Energy Landscape
To meet goals outlined in the Paris Climate Agreement, governments all over the world are scrambling to implement legislation limiting carbon dioxide emissions, with a view to achieving net-zero emissions by 2050. With climate change already making itself felt with increasing force and frequency, world leaders are increasingly coming to recognize that delay is simply not an option.
Achieving net zero has profound implications for the global energy industry, as well as how people all over the world access and use energy. According to a report published by the Tyndall Centre for Climate Change Research at the University of Manchester, which investigates various different energy scenarios designed to limit temperature rises to 1.5˚C, five changes to the energy system will be necessary by 2050:
- Rapid electrification of many industrial sectors of the global economy
- Rapid reduction in oil, gas, and coal use
- Rapid decarbonization of the electricity sector, with significant increases in solar and wind replacing gas and coal
- A global reduction in overall energy consumption due to greater energy efficiency
- Growth in use of low-carbon fuel sources such as bioenergy and hydrogen
Charting the Course: Transition to Green Fuels in Global Shipping
If realized, these changes to the global energy system will have profound implications for shipping. Currently, 36% of global shipping trade volume involves the transportation of energy products, primarily oil, gas, and coal. In the future, shipping will be used to transport different types of fuel in different quantities. Should the 1.5˚C scenarios become a reality, this transition to green fuels will start in a timeframe of months and years rather than decades, presenting both challenges and opportunities for the world’s maritime transport companies.
While shipping of traditional energy products is predicted to fall, transport of new fuels is tipped to far outweigh falls in shipments of coal and oil as the mix of energy products transported by ship changes. While the net-zero target forces a reduction in global consumption of oil, gas, and coal, it also means that less will be transported and consumed. On the other hand, the transportation of biomass and hydrogen will increase, with hydrogen being transported across the world’s oceans in the form of ammonia.
Implications of Green Energy Transport for the Global Shipping Sector
The Tyndall Centre for Climate Change Research report suggests that reductions in oil and coal transportation will start in the 2020s, meaning that the global shipping sector will need to prepare for a rapid transition. The report predicts that by 2050, oil shipments will have fallen by between 50% and 90%, with coal shipments falling by 90% to 100%. The report also indicates that natural gas consumption will decrease, too. However, as a greater proportion of natural gas is transported by ship, the shipping sector will play a continuing role in its transportation, at least in the medium term.
The Tyndall Centre for Climate Change Research team highlights that while shipments of oil and coal will fall, future ammonia and bioenergy shipments could potentially replace them completely in terms of shipment quantity. The research also indicates that increased shipments of green energy will pose a few technical difficulties in delivery for the shipping sector. This is given the sector’s existing infrastructure and familiarity with a wide range of different cargo types.
Decarbonizing the Shipping Industry for a Sustainable Future
A cornerstone of global trade and development, the shipping industry accounts for somewhere between 2% and 3% of total global carbon emissions. If shipping is to play its part in helping to avoid the worst impacts of climate change, like other industries, the sector will need to achieve net-zero emissions by 2050. Industry insiders predict a rapid reduction in greenhouse gas emissions throughout the global shipping industry starting in around 2030. The sector’s transition pathway is expected to follow an S-curve by replacing fossil fuels with new scalable zero-emissions fuels (SZEF).
Decarbonizing shipping is predicted to unlock up to $1.9 trillion in global investment, with 87% of this funding earmarked for land-based infrastructure and production facilities. Therefore, decarbonizing shipping presents huge challenges. It also offers vast opportunities for a range of corporations and countries seeking to stimulate investment in the broader energy transition.
The Shipping Industry Goes Green
In conclusion, the imperative to mitigate climate change has catalyzed a pivotal shift in the global shipping industry. As the world seeks to limit temperature rises and achieve net-zero emissions, the role of shipping in transporting traditional energy products will undergo a profound transformation. The rise of green fuels and the imperative to decarbonize shipping present significant challenges, yet they also offer unprecedented opportunities for innovation and investment.
The transition to zero-emission fuels not only aligns with the broader global energy shift but also holds the potential to unlock substantial investment, with far-reaching implications for the shipping industry and the global economy. Embracing this transformation will require strategic foresight, technological advancements, and collaborative efforts among stakeholders. As we navigate this crucial juncture, the evolution of the shipping industry toward sustainable, green transport will not only contribute to a healthier planet but also foster a more resilient and environmentally conscious global trade ecosystem.
