IEA (2019), "Tracking Transport", IEA, Paris https://www.iea.org/reports/tracking-transport-2019
In April 2018, the IMO adopted a strategy to reduce GHG emissions from shipping to align the sector with the Paris Agreement climate goals.
The strategy aims to reduce the carbon intensity of international shipping by at least 40% from the 2008 level by 2030 and to pursue efforts to reduce emissions intensity 70% by 2050. It also proposes to cut absolute GHG emissions by at least 50% by 2050, and thereafter to attempt to eliminate them altogether.
The consequences of this strategy will be far-reaching, as energy-efficient technologies and fuel switching must be adopted more quickly than ever before.
However, even with all policy measures currently in place and proposed, CO2 emissions from international shipping are projected to be 50% higher in 2040 than they were in 2008. This gap reveals the urgent need for policy action.
The only IMO regulations currently in place that directly address GHG emissions from ships are in the Energy Efficiency Design Index (EEDI), an efficiency standard for new ships, and the Ship Energy Efficiency Management Plan (SEEMP).
Under these policies, average fleet energy efficiency improvements of only 1% annually between 2015 and 2025. Under the NPS, which takes the impact of the EEDI into account, carbon intensity per unit of transport work decreases by only 35% during 2010‑30, falling well short of the IMO targets.
There is an even larger gap between the uptake of low-carbon fuels expected under current and announced policies and the level required under the SDS: only 3% of maritime fuel demand is met by low-carbon fuels in 2040 under the present framework, compared with the 25% prescribed in the SDS.
This wide discrepancy between the two scenarios illustrates the urgent need for policy action to drive a shift to low-carbon fuels in international shipping.
While the IMO Initial GHG Strategy includes a list of possible short-, medium- and long-term measures, the EEDI and SEEMP are the only emissions regulations currently in place. Implementation of strategy measures is still under discussion at the IMO.
Shipping decarbonisation requires swift implementation and scale-up of new measures such as a more aggressive EEDI, a mechanism to raise operational efficiency, a low-carbon fuel mandate or standard, and a carbon pricing mechanism. These measures need to be implemented before 2023, at which time the IMO’s initial strategy calls for specific measures, and scaled up rapidly to meet long-term IMO targets.
In the OECD delegation’s submission to the IMO, numerous measures were recommended to align international shipping with the SDS, including:
- Strengthening the EEDI to require that all new ships entering the fleet be at least 60% more efficient than the EEDI baseline by 2030 (50% for container ships).
- Implementing an operational efficiency standard ensuring that ships still in use in 2030 are nearly 20% more efficient than the EEDI baseline (around 15% for container ships).
- Implementing a mechanism enabling the adoption of low-carbon fuels (e.g. a low-carbon fuel standard or mandate) to reduce the average well-to-wheel carbon intensity of marine fuels by close to 10% from the 2015 level by 2030, and by nearly 50% by 2050.
- Developing and adopting a CO2 pricing system for maritime fuels.
To put international shipping on the SDS trajectory, it is essential to switch to low- and zero-carbon fuels, as they barely figure in the maritime fuel mix.
Interest in using alternative fuels such as ammonia, hydrogen or advanced biodiesel and ammonia mounted significantly after the IMO adopted its initial strategy to reduce GHG emissions from ships by 2050. This agreement happened shortly before the implementation of Emission Control Areas (which limit sulphur oxide [SOx] and particulate matter [PM] emissions near ports) and tighter sulphur emission regulations, which will come into force in 2020.
Although advanced biofuels, hydrogen and ammonia are potential low-carbon options to replace conventional fuels, an important uptake barrier is their high cost compared with conventional fuels. In the cases of ammonia and hydrogen, another barrier is the lack of infrastructure.
In addition to diversifying the sources of maritime fuel supplies, adopting alternative fuels would help meet the tighter sulphur standards coming into effect in 2020; alternatives to bunker fuel will also be needed to meet SOx and PM emissions limits near a growing number of the world's ports (Emission Control Areas). These near-term air pollution targets can generally be met by switching to low-sulphur diesel or investing in scrubbers, and liquefied natural gas (LNG) is also an option because it does not emit SOx.
Oil demand in this fast-growing sector is set to rise 20% (to 6 million barrels per day) by 2030 unless measures are taken to enforce the IMO’s long-term GHG emissions target. Ship owners must therefore make some important decisions very soon.
In the long term, GHG emissions from international shipping must be cut by at least 50% by 2050. A challenge to meeting this IMO target is that ship lifetimes generally span two to three decades. However, depending on eventual costs and incentives, using ammonia or hydrogen could be a solution.
The authors would like to extend their gratitude to Tristan Smith, of the UCL Energy Institute, for his valuable input and feedback on this section.