The World Bank came to some significant conclusions regarding the investments needed to decarbonize maritime transport. In a new 60-page report the bank outlines how carbon revenues from international shipping could be distributed in a way that maximizes climate outcomes, and supports an equitable transition.
Several trillions of dollars will be needed, in accordance with the report, to decarbonize shipping in line with the Paris Agreement temperature targets. Carbon revenues can cover some of these investments, says the World Bank.
It highlights that decarbonizing shipping, enhancing maritime transport infrastructure and capacity, as well as supporting broader climate aims represent the revenue options most aligned with the Initial IMO GHG Strategy, selected principles, and desirable features.
Significant investments are needed to decarbonize maritime transport. It is estimated that capital investments of between $1 trillion and $1.9 trillion will be needed between 2030 and 2050 to reduce GHG emissions by 50 percent or 100 percent by 2050. These estimates assume that ammonia will be the primary zero-carbon fuel choice.
Approximately 87% of the total investments are needed for land-based infrastructure and production facilities for low-carbon fuels (half of which would go toward hydrogen production and the other half toward ammonia synthesis, storage, and distribution). The remaining 13% of the estimated investment needs relate to ships and include the machinery and onboard storage for ships to run on ammonia, and energy efficiency technologies.
In accordance with the World Bank, “while these estimates for hydrogen production, ammonia synthesis, bunkering infrastructure, and ship enhancements are already significant on their own, additional investments in renewable power generation will be needed to provide the necessary energy to produce zero-carbon bunker fuels.”
As it is estimated by the World Bank, carbon revenues from international shipping can cover some of these investments and help catalyze additional resources, lower abatement costs, and accelerate GHG emissions reductions in the sector.
Carbon revenues can finance part of the investments needed and help mobilize further financial resources from the private and public sectors, the report highlights.