New Study – future fuel demand for shipping industry equal to entire current global production of renewables.
The UNFCCC Paris agreement of 2015 aims for global climate-neutrality by the middle of this century. The global shipping industry has pledged to achieve net-zero CO2 emissions by 2050, meaning that the fourth propulsion revolution will be green.
The transition to new fuels presents enormous opportunities as well as critical transformational challenges for all segments of the global economy.
Current geopolitical tensions are creating fuel supply uncertainty and heightening energy security concerns. This increases the pressure to accelerate the transition to green fuels, as well as establish alternative fuel hubs and routes to increase resilience.
Governments, ports, developing economies, and key stakeholders that create renewable energy supply centres and production hubs will benefit greatly from early mover advantage.
The International Energy Agency’s (IEA) Net Zero Emissions by 2050 scenario says to decarbonise the world, global electricity demand will increase to 60,000 TWh, up from 23,230 TWh in 2020. Shipping will not only be a consumer of (net) zero emission carbon fuels to meet decarbonisation targets, but is critical for transportation of green fuels as it is the most economical option over long distances (above 10,000km).
At least half of (net) zero fuels are expected to be moved by ships, according to the International Renewable Energy Agency (IRENA), making maritime a key enabler of the decarbonisation of land-based industrial sectors.
However, maritime decarbonisation is highly dependent on the transition speed of energy producers, in terms of building renewable energy production facilities ashore at scale, catalysts such as global levies needed to accelerate production of fuels at scale, as well as with updated infrastructure at ports.
Governments and industry must act now to ensure that their energy transition plans account for and support the vital role that shipping will play in delivering renewable energy and hydrogen plans.
Policy, funding and actions must combine to create an easy path towards the green propulsion transition. This is where development finance can play a significant role in de-risking the much needed investment required to move to a (net) zero carbon fuel future.
This research has looked to identify the amount of electricity needed to produce (net) zero carbon fuels for maritime use as part of the wider global energy transition. For shipping’s (net) zero carbon fuel needs, electricity from renewable sources used to supply shipping would need to increase by up to 3,000 TWh.
This would require the equivalent of all of the world’s current renewable energy production just to provide shipping’s fuel needs.
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Fuelling the Fourth Propulsion Revolution, May 22, 2022
