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Decarbonising shipping creates $1trn opportunity for developing nations

Global Carbon Market Hits $800 Billion Despite Dwindling Trade Volumes

The World Bank has said that the reduction of carbon dioxide emissions through the use of low carbon power sources in international shipping would create $1trillion opportunities for developing nations, even those who are not oil producers.

Binyam Reger, acting global director for transport and manager of transport global practice for the World Bank, in a presentation at the UN COP 26 summit in Glasgow on Wednesday, shared a World Bank study that purported to show massive opportunities for developing countries.

According to the World Bank expert, the move towards decarbonization could allow the participation of countries without the traditional oil used in shipping through the production of hydrogen and ammonia for domestic use and for exports.

Reger said about 208 countries could potentially benefit from this shift. The production of blue ammonia is currently dominated by a few countries with little potential for developing countries.

In the developing world, several firms are developing green ammonia, a route to ammonia in which hydrogen derived from water electrolysis powered by alternative energy replaces hydrocarbon-based hydrogen, making ammonia production virtually carbon dioxide-free, says industry publication.

These companies are investing in carbon capture and storage to minimize the carbon impact of making conventional ammonia, creating what the industry refers to as blue ammonia.

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The aim is to capture, store and ship hydrogen for use in emission-free fuel cells and turbines. Some also seek to combust ammonia directly in power plants and ship engines.

However, these require millions of dollars, financial investment unavailable to many developing countries. Reger said green ammonia offers developing countries a path in getting onto the game.

“I think there’s quite a lot of potential in many countries that can be part of this party chain for transitioning the shipping industry into green ammonia or greener, or zero-carbon bunker fuels,” he said.

Reger contends that zero-carbon fuel production can create investment and export opportunities.

Countries can further benefit by becoming refueling hubs on the green shipping line at the same time, they produce the zero-carbon fuel that would be used for export.

For countries, some estimates put in about a trillion dollars, maybe even more to really see the transition into a zero-carbon bunker fuel system.

So from our point of view, from where we stand at the World Bank as a development institution, this really could be a game-changer in terms of not only making the shipping industry greener but also providing the countries an opportunity for a new industrial and job creation industry.

Why a shift is needed

Carbon emission from the shipping industry, which accounts for 3 percent of the total CO2 emissions, has been at an upward rise due to rising global trade.

“Trade increase is a good thing for reducing poverty and increasing prosperity of countries but it means the shipping industry contributes a great deal to greenhouse gas emissions and climate change,” said Reger.

Nineteen countries including Britain and the United States on Wednesday agreed to create zero-emissions shipping trade routes between ports to speed up the decarbonization of the global maritime industry.

Climate action requires a rapid shift from today’s predominant use of fossil fuels to zero-carbon alternatives.

Johannah Christensen, the CEO, Global Maritime Forum, said emerging economies and developing countries will play a critical role, not only in shipping decarbonization in the wider energy transition but in reaching global emissions targets.

“Many developing and emerging economies have renewable energy potential and are located close to key shipping lanes, putting them in a position to produce and export their emissions, green fuels derived from renewable energy,” said Christensen.