Container shipping industry faces USD 1.4 trillion decarbonisation expense

The CO2 emissions from the container shipping industry, reaching approximately 230 million tons in 2023 out of a total of about 1 billion tons for all maritime shipping, are alarmingly high and on the rise.

Opposite to expectations of a reduction in CO2-equivalent emissions by 2030, the industry’s combined emissions are projected to sharply increase in 2024 as vessels opt for the Panama Canal over the Red Sea, resulting in a roughly 30% increase in voyage distances.

According to the New York-based consultancy company AlixPartners, in a worst-case scenario, industry emissions could reach around 350 million tons by 2050 unless concerted action is taken by governments, shippers, consumers, and industry groups.

While targeted investments and the adoption of alternative fuel propulsion systems will not be adequate to achieve the mandated 20% reduction by 2030, reaching net-zero emissions by 2050 is still feasible, although challenging.

This would necessitate converting 5% to 17% of the industry’s fleet to zero-emission fuels by 2030 and 84% to 93% by 2050, requiring an investment of up to USD 1.4 trillion.

The costs would be shared among carriers, energy suppliers, shippers, and end users. However, achieving these targets will require strong incentives and penalties to change the behaviour of carriers and shippers, a process that will not happen easily or quickly.

Formulating and coordinating cross-border regulatory changes is challenging, especially given the differing approaches to climate change mitigation among governments and their varying priorities.

Additionally, container shipping is not a primary concern for climate activists, as most oceanic activities occur out of sight of consumers and receive minimal attention from them.

Download the full AlixPartners’ 2024 container shipping outlook HERE.