Report Plots Path to a Net Zero Future for UK Shipping
A report produced by Marine Capital, with the support of UMAS and Lloyd’s Register (LR), estimates that approximately $93 billion of investment over the coming three decades will be required for the UK’s domestic maritime sector to transition to net zero. The UK has committed to reaching net zero by 2050, and this target extends to domestic shipping. The maritime sector is complex and diverse, and there are no simple solutions. The challenges also bring opportunities, but investment is needed.
Over the next three decades, an estimated $92 billion will need to be invested in the domestic maritime sector to transition to net zero. Almost half of this would be necessary to replace the domestic and short sea fleets with vessels that lower and eventually achieve net zero emissions. The balance would cover investment in infrastructure, including fuels and port shore power.
Despite the challenges, the energy transition also offers three significant opportunities for the UK maritime sector. First, it facilitates the renewal of the domestic fleet with low and zero-emission vessels. Secondly, it allows legacy infrastructure to be updated, and finally, it will enable the maritime sector to build a manufacturing supply chain and skills for the clean energy future.
Access to capital is a critical hurdle, but according to the report, there are funding models that could help channel investment into the sector. Through case studies, the report considers how institutional capital can be unlocked at scale through different funding mechanisms and the appropriate supporting government policy. The case studies highlight particular areas which are suitable for priority attention. Ferries and ro-ro vessels, which account for ten percent of vessels but 50 percent of emissions from the domestic and short sea fleets, are one such area, as are offshore service vessels. Given the UK’s planned expansion in offshore wind projects, vessels that service this market are also good candidates for targeted measures.
The scale of investment needed to fund decarbonization cannot be sourced from within the industry or through its traditional lenders; this will need to come from institutional investors. To mobile investment from external sources, a coordinated approach is required but governmental and industry stakeholders. To achieve its goals in the required time frame, the government will need to develop a coherent strategy, introduce cohesive policies, and facilitate inward investment through appropriate measures.
“The coming three decades will need to see a significant shift towards large-scale investments into new and retrofitted vessels in domestic fleets, zero carbon fuel production, and bunkering infrastructure, alongside their associated supply chains, which can span across multiple related industries across the world,” Dr. Carlo Raucci, Decarbonisation Consultant, LR Maritime Decarbonisation Hub, said. “These are deep, long-term commitments requiring a coordinated approach by both government and the industry to mobilize investments from external sources of capital.”