UNCTAD calls for bold global action to decarbonize shipping

The United Nations Conference on Trade and Development (UNCTAD) has called for a “just and equitable transition” to a decarbonized shipping industry in its Review of Maritime Transport 2023 launched ahead of World Maritime Day. The agency highlights the pressing need for cleaner fuels, digital solutions and an equitable transition to combat continued carbon emissions and regulatory uncertainty in the shipping industry.

The shipping industry accounts for over 80% of the world’s trade volume and nearly 3% of global greenhouse gas emissions, with emissions escalating by 20% in just a decade. UNCTAD Secretary-General Rebeca Grynspan said “Maritime transport needs to decarbonize as soon as possible, while ensuring economic growth. Balancing environmental sustainability, regulatory compliance and economic demands is vital for a prosperous, equitable and resilient future for maritime transport.”

UNCTAD, ahead of the United Nations climate conference (COP28) in November of this year, advocates for a shift towards cleaner fuels in shipping, emphasizing the need for an environmentally effective, procedurally fair, socially just, technologically inclusive and globally equitable transition strategy. The organization underscores the importance of system-wide collaboration, swift regulatory interventions, and robust investments in green technologies and fleets.

While the transition to cleaner fuels is in its early stages, with nearly 99% of the global fleet still reliant on conventional fuels, the report cites promising developments, including 21% of vessels on order designed for alternative fuels.

However, the transition comes with substantial costs. UNCTAD reports that an additional $8 billion to $28 billion will be required annually to decarbonize ships by 2050, and even more substantial investments, ranging from $28 billion to $90 billion annually, will be needed to develop infrastructure for 100% carbon-neutral fuels by 2050. Full decarbonization could elevate annual fuel expenses by 70% to 100%, potentially affecting small island developing states (SIDS) and least developed countries (LDCs) that heavily rely on maritime transport.

To ensure an equitable transition, UNCTAD calls for a universal regulatory framework applicable to all ships, irrespective of their registration flags, ownership or operational areas, thereby avoiding a two-speed decarbonization process and maintaining a level playing field.

UNCTAD further expresses concern over the ageing global shipping fleet – at the start of 2023, commercial ships were on average 22.2 years old, two years older than a decade ago. More than half of the world’s fleet is over 15 years old.

Ship owners face the challenge of renewing the fleet without clarity regarding alternative fuels, green technology and regulatory regimes to guide ship owners and ports, while port terminals face similar challenges in vital investment decisions.

In addition to cleaner fuels, UNCTAD underscores the role of digitalization in accelerating decarbonization efforts, citing the benefits in enhancing efficiency and reducing delays.