The global shipping industry will need the equivalent of the world’s entire current renewable energy production in order to decarbonise.
A new report commissioned by the International Chamber of Shipping shows a “huge and immediate” need for green fuels in maritime transport.
That presents investors and governments with an “enormous opportunity”, according to the ‘Fuelling the Fourth Propulsion Revolution’ study.
Authored by Professor Stefan Ulreich from Germany’s University of Applied Sciences, the report says that, in order to reach the shipping industry’s 2050 net zero goal, fuel needs would require electricity from renewable sources to increase by up to 3,000 terawatt hours (TWh).
That is the equivalent of the entire world’s current renewable energy production.
It also found that to achieve the IEA’s Net Zero Emissions by 2050 scenario, the world would need an 18-fold increase in existing renewable production capacity.
The scale of such change brings with it huge opportunities though.
Taking the global trading of hydrogen as an exemplar, the report identified substantial potential benefits for exporting and importing countries, particularly in the Global South.
This is due to the expected production cost differentials of such fuels across the world – expected range of €72.60/MWh to €156.40/MWh in 2050.
The cost range reflects the abundance of renewable potential, such as solar and wind power, in many African and Latin American countries, which can generate the electricity needed in the production of hydrogen fuels at much lower cost.
Germany, Algeria, and Chile have been highlighted as first movers, with each country striking bilateral agreements on the production of hydrogen fuels.
Professor Ulreich said: “To meet the enormous demand for hydrogen-based fuels in the Global North, production centers in the Global South are urgently needed.
“While governments are beginning to realise the need to transition to fuels like hydrogen, little thought to date seems to have been given to how they will actually transport those fuels.
“Shipping must be part of wider energy transition negotiations, and shipping and ports are going to need investment. But with this investment comes huge opportunity for return.”
Stuart Neil, director of strategy and communications at the International Chamber of Shipping said: “Shipping will be a key enabler of the global energy transition, providing cost effective and flexible solutions to transport at least half of the net zero carbon fuels traded around the world.
“A great deal is talked about the global energy transition to zero emission fuels outside of shipping. But what we have found in this report is that there is a tremendous opportunity for all.”