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Maritime’s green future priced at $28 billion annually until 2050 by UNCTAD

The United Nations Conference on Trade and Development (UNCTAD) has sounded the alarm for a swift and inclusive shift towards a green maritime industry. Launched on the eve of World Maritime Day, UNCTAD’s Review of Maritime Transport 2023 accentuates the urgent need for clean energy sources, innovative digital technologies, and a fair transition to tackle the rising carbon footprint and regulatory ambiguities plaguing the shipping sector.

Representing a staggering 80% of global trade by volume, the shipping sector also contributes to nearly 3% of worldwide greenhouse gas emissions. Alarmingly, these emissions have surged by 20% over the past ten years. Addressing this, UNCTAD Secretary-General Rebeca Grynspan stressed, “The maritime world must prioritize decarbonization without compromising economic expansion. Striking a balance between ecological sustainability, regulatory adherence, and economic necessities is the linchpin for ensuring a thriving, equitable, and robust maritime future.”

As the countdown to the pivotal United Nations climate conference (COP28) in the UAE begins, UNCTAD emphasizes a paradigm shift to cleaner energy for ships. The body champions a transition that is environmentally sound, socially equitable, technologically inclusive, and globally harmonized. A linchpin for success, according to the organization, is global cooperation, prompt regulatory actions, and significant investments in green tech and fleets.

While the momentum towards green fuel is nascent, with a whopping 99% of the world’s fleet still on traditional fuel, there’s a glimmer of hope. An encouraging 21% of newly commissioned vessels are being designed for cleaner fuel alternatives. Nonetheless, this green evolution carries a hefty price tag. UNCTAD’s findings indicate a whopping $8 billion to $28 billion yearly investment will be necessary to green the fleets by 2050. More so, a colossal $28 billion to $90 billion annually will be essential to pave the way for completely carbon-neutral fuel infrastructure by mid-century. This ambitious transition could surge fuel costs by up to 100%, potentially impacting maritime-dependent small island nations and underdeveloped countries.

To level the playing field, UNCTAD advocates for a globally consistent regulatory environment, ensuring all vessels are held to the same standards. Shamika N. Sirimanne, UNCTAD’s technology and logistics head, proposed, “Financial inducements, such as levies tied to shipping emissions, can propel alternative fuels to the forefront and narrow the price divide with traditional fuels. Such funds could also channel investments into ports in vulnerable regions, addressing climate resilience, trade enhancements, and digital integrations.”

Despite a slight dip in maritime trade in 2022, projections for 2023 are bullish, forecasting a 2.4% growth. Additionally, container trade, which shrank by 3.7% last year, is poised for a 1.2% expansion this year, with a robust 3% growth trajectory through 2028. Various external factors, including geopolitical events, have buoyed oil and gas trade volumes in 2022, leading to a revival in tanker freight rates.

Dry bulk rates, however, remained volatile, influenced by fluctuating demand, port bottlenecks, and unpredictable weather patterns. In essence, UNCTAD’s clarion call for a green overhaul in global shipping is a beacon for unified commitment and policy interventions to counter maritime industry’s growing ecological concerns. Prompt, bold, and collaborative measures are paramount for sculpting a green, resilient, and flourishing maritime horizon.

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