Tracking Progress: International shipping

International Shipping

The shipping sector is a key enabler of international trade and constitutes the most energy-efficient way to move goods. But limited policy deployments have led to a slow uptake of clean technologies in shipping. Meeting 2DS goals requires the rapid adoption of markedly more ambitious policies.

Recent trends

The shipping sector accounts for 80% of global trade in physical units and 2.0% of CO₂ emissions from fuel combustion. Shipping activity is closely linked to gross domestic product (GDP) growth. Both shipping activity and GDP have increased steadily, by 3.8% and 3.6% per year from 2000 to 2015 respectively (UNCTAD, 2016; World Bank, 2017). International shipping energy demand increased by 1.6% per year from 2000 to 2014. Historically, shipping energy use has also been closely correlated with GDP growth; however, a decoupling of this trend has been observed since around 2010 (IMO, 2014). This matches a decline in trade activity in 2009 and a slow subsequent recovery after that, as well as a trend towards upgrading of the global container fleet to larger and more efficient ships beginning in 2011. The vast overcapacity resulting from this led to the early retirement of old and inefficient ships, and boosted the energy efficiency per tonne kilometre (tkm) of the global fleet by an unprecedented average annual rate of 5.8% from 2010 to 2014. Slow steaming, which has become more common in response to overcapacity, also led to operational efficiency improvements (IMO, 2014; ITF, 2017).

In 2013, the IMO introduced the EEDI, the first energy efficiency standard for new ships., mandating a minimum improvement in the energy efficiency per tonne kilometre of new ship. A global sulphur cap of 0.5% on marine fuels will also come into force in 2020 (IMO, 2016). Meeting this cap will require significant changes in the fuel mix and may lead to higher maritime fuel prices. Heavy fuel oil (HFO) (currently 84% of the marine bunkers fuel mix) will also have to be desulphurised or replaced by low-sulphur diesel, LNG, biofuels or other synthetic fuels. Alternatively, vessels will need to be equipped with scrubbers to reduce emissions of SOx.

Tracking progress

In its current form, the EEDI mandates a 1% annual improvement in the efficiency of the global fleet from 2015 to 2025. According to IEA statistics and United Nations Conference on Trade and Development (UNCTAD) activity data, the energy used by the global shipping fleet per tonne kilometre declined by 2.2% between 2000 and 2014. This suggests that the EEDI will prevent the backsliding of energy efficiency, but not the reduction of GHG emissions beyond historical trends. Fuel price increases due to the sulphur cap could stimulate interest in efficiency and reduce energy use, but technologies that reduce SOX emissions – except for advanced biofuels, low-carbon synthetic fuels and, to a much lesser extent, LNG – will not lower GHG emissions.

Getting on track with the 2DS requires an annual efficiency improvement of 1.9% MJ per vehicle kilometre (MJ/vkm), and 2.3% MJ per tonne kilometre (MJ/tkm), between 2015 and 2025. This can be achieved by exploiting the efficiency improvement potential for new and current ships and the adoption of operational improvements. Efficiency technologies available today could roughly halve the average fuel consumption per vehicle kilometre of new ships (IEA estimate based on Smith et al., 2016). This will need to be complemented by the use of advanced biofuels.

Recommended actions

Defining a GHG emissions mitigation target for international shipping is a first step to getting on track with 2DS targets. Raising the ambition of the EEDI, introducing mandatory standards on operational efficiency (also requiring proper monitoring of ship performances) and pricing GHG emissions are effective instruments to move in this direction.

The International Maritime Organisation (IMO), is the major forum in which this vision can be developed and implemented. Proactive action in the IMO is paramount to successfully reduce GHG emissions from international shipping.

Long-term investment decisions will have to be taken by ship owners, operators, financiers and refiners to reduce local pollutant emissions. In the absence of rapid signals to steer these decisions towards GHG emissions reductions goals,  investments aiming only to reduce only local pollutant emissions will run serious risks to be stranded when pressure on shipping to contribute to the low-carbon transition will grow.

Report

Published: 16 May 2017

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