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It is possible for sustainable shipping fuels to reach cost parity with fossil fuels by 2035, but only with the help of decisive emissions policy, according to a new report from technology company Wärtsilä.
Shipping is responsible for transporting 80% of world trade. While it is the most efficient and environmental means of transporting goods, it emits 2% of global emissions. The International Maritime Organisation (IMO) has set a target to achieve net zero emissions by 2050, but without action emissions could reach more than 45% by 2050.
Wärtsilä’s report Sustainable fuels for shipping by 2050 – the 3 key elements of success finds that while existing decarbonisation solutions, such as fuel efficiency measures, could cut up to 27% of emissions, sustainable fuels will be a critical step in eliminating the remaining 73%. However, radical action is needed to scale them.
As the report highlights, the industry suffers from a ‘chicken and egg’ situation in that ship owners won’t commit to a sustainable fuel that is expensive and only produced in small quantities. Meanwhile, sustainable fuel suppliers won’t scale production without clear demand signals.
Wärtsilä has produced new modelling that includes a timeline of which fuels are likely to become widely available on a global scale, when and at what cost. This roadmap for the future of sustainable fuels (shown below) identifies how the industry can more rapidly and affordably scale these fuels and achieve full decarbonisation by mid-century – within the lifetime of just a single vessel.
Wärtsilä
To accelerate this timeline, the report argues that decisive policy implementation, industry collaboration and individual operator action must coalesce to scale the production of these fuels.
Wärtsilä’s modelling shows that if action is taken, by 2035 the price gap between fossil fuels and sustainable fuels could close for the very first time.
“Achieving net zero in shipping by 2050 will require all the tools in the toolbox, including sustainable fuels. As an industry, we must focus on coordinating action across policymakers, industry and individual operators to bring about the broad system change required to quickly and affordably produce a mix of sustainable fuels,” said Roger Holm, president of Wärtsilä Marine and executive vice president at Wärtsilä Corporation.
However, this new report is released as another finds that all major oil and gas companies plan fossil fuel expansion incompatible with internationally agreed climate goals.
This new report Paris Maligned II: climate alignment assessments reveal oil & gas company transition risk from think tank Carbon Tracker enables investors and regulators to judge whether the 25 largest listed fossil fuel firms are aligned with the Paris Agreement goals. The report found that none are.
The report scores firms on a scale from A to H, using criteria including investments, production plans and emission targets. A is scored as being potentially aligned with the goals of the Paris Agreement, while H is the furthest away.
The highest ranked company BP received a D-grade, while the lowest ranked ConocoPhillips received an H. Four of the top five highest scoring companies are European (BP, Repsol, Equinor and Eni), while three of the five lowest scoring firms are US domiciled (ExxonMobil, Pioneer and ConocoPhillips).
Almost all the firms assessed plan new developments and production increases in the near-term. Only BP plans a decline in the longer term, while Repsol, Equinor, and Shell envisage keeping levels roughly the same.
“Companies worldwide are publicly stating they are supportive of the goals of the Paris Agreement, and claim to be part of the solution in accelerating the energy transition. Unfortunately, however, we see that none are currently aligned with the goals of the Paris Agreement, albeit there are clear differences between companies. This report gives evidence for investors and other stakeholders to hold companies to account,” said Maeve O’Connor, oil and gas analyst and report author.
