The shipping industry must significantly elevate its utilisation of alternative fuels to align with the goal ofm achieving zero emissions.
Nations must navigate the course in line with the objectives of the Paris Agreement, ensuring that global warming remains below 1.5 degrees Celsius. Achieving this target necessitates substantial and unprecedented reductions in carbon dioxide emissions, with the aim of achieving net-zero emissions by around 2050. To meet this objective, the energy system must embrace the following transformations by the year 2050:
- Reductions in overall global energy consumptions
- Rapid electrification of many sectors of the global economy
- Rapid decarbonisation of the electricity sector, with large increases in wind and solar replacing coal and gas
- Rapid reductions in coal, oil and gas use
- Growth in the use of lower-carbon fuels such as hydrogen and bioenergy
What role does the shipping industry play in this context?
The current trade within the shipping industry encompasses 36% of energy product transportation, notably oil, coal and gas. Therefore, to align with the goal of achieving zero emissions, the shipping industry must significantly elevate its utilization of alternative fuels, including but not limited to biofuels, hydrogen, ammonia and electricity. This transformation presents its challenges to the shipping sector. To achieve this objective, technical innovation, supportive policies, and collaborations are crucial for the adoption of low and zero carbon fuels. Nevertheless, there are already notable developments in emission regulations and technologies aimed at decarbonizing the shipping industry.Notably, in April 2023, the European Union adopted a reform of the EU Emissions Trading System (ETS) such that emissions arising from this industry are within scope. In fact, companies operating vessels in the EEA will have to allocate emission allowances equivalent to a specific portion of their greenhouse gas (GHG) emissions over a calendar year. This process will commence with 40% of emissions in 2024, increasing to 70% in 2025 and reaching 100% in 2026. The EU Monitoring, Reporting, and Verification (MRV) system, which will be expanded and revised to encompass the necessary GHG emissions, ship types, and sizes, will be used to report and verify these emissions.
In March 2023, the European Council and Parliament reached a provisional agreement on the FuelEU Maritime initiative, which sets limits on the greenhouse gas (GHG) intensity of energy used by ships, with increasingly strict reductions over time. These reductions begin with 2% in 2025, rising to 6% in 2030, and culminating in an 80% reduction by 2050 compared to 2020 GHG intensity levels. The carbon intensity targets have been made slightly more demanding than earlier proposals, but concerns remain about the adequacy of short-term targets. Malta has embraced this strategy as it paves the way to reducing carbon emissions in global shipping. This is of paramount importance for Malta, given its significant role as a prominent flag State and small island State in the Mediterranean. Nonetheless, Malta is dedicated to collaborating closely and proactively with all stakeholders to guarantee the successful implementation of this strategy.
Concluding remarks
In essence, it is evident that the shipping industry is emerging as a pivotal player in the global energy transition. As we navigate the path to sustainability, the industry’s commitment to reducing emissions, adopting alternative fuels, and complying with evolving regulations marks a significant step towards a greener future.Article written by Dr. Claudia Borg, Junior Lawyer
