In the vast expanse of the world’s oceans, a transformation is underway.
The international shipping sector, made up of thousands of massive cargo ships laden with many of the goods we buy, emits carbon dioxide (CO₂) roughly equivalent to the entire country of Germany.
Our research emphasises the need for immediate action. Reducing shipping emissions by 34% by 2030 is necessary to stay on course with the Paris Agreement’s 1.5°C goal. But with low-carbon fuel pipelines unlikely to be available at the necessary scale until at least the 2030s, how can the industry meet its short-term target?
The war in the Ukraine is stifling trade and logistics of Ukraine and the Black Sea region. The search for alternate trade routes for Ukrainian goods has rapidly increased the demands on land and maritime transport infrastructure and services.
For Ukraine's trading partners, many commodities now have to be sourced from further away. This has increased global vessel demand and the cost of shipping around the world.
Grains are of particular concern given the leading role of the Russian Federation and Ukraine in agrifood markets, and its nexus to food security and poverty reduction.
Grain prices and shipping costs have been on the rise since 2020, but the war in Ukraine has exacerbated this trend and reversed a temporary decline in shipping prices. Between February and May 2022, the price paid for the transport of dry bulk goods- such as grains- increased by nearly 60 per cent. The concomitant increase of grain prices and freight rates would lead to a nearly 4 per cent increase in consumer food prices globally. Almost half of this impact is due to higher shipping costs.
The Russian Federation is a giant in the global market for fuel and fertilizer, which are key inputs for farmers worldwide. Disruptions in their supply can lead to lower grain yields and higher prices, with serious consequences for global food security, particularly in vulnerable and food-import dependent economies.
The Russian Federation is also a leading oil and gas exporter. Confronted with trade restrictions and logistical challenges, the cost of oil and gas has increased as alternative sources of supply, often at more distant locations, are called upon.
Higher energy costs have led to higher marine bunker prices, increasing shipping costs for all sectors. By the end of May 2022, the global average price for very low sulphur fuel oil (VLSFO) had increased by 64 per cent with respect to the start of the year.
Taken altogether, these increased costs imply higher prices for consumers and threaten to widen the poverty gap.
Global trade depends on a complex system of ports and ships that connect the world. If global trade is to flow more smoothly, it must be ensured that Ukrainian ports are open to international shipping and that collaboration among transport stakeholders continues to provide services. Alternative ways of transport must also be pursued. And investment in transport and trade facilitation should be fostered as well as the support for the most vulnerable economies.
A policy brief is now available on transport infrastructure emissions for the road and railway sectors. Authors Greg Marsden, Kadambari Lokesh, Danielle Densley-Tingley have released a new work titled" Everything Counts" that quantifies emissions for both road and rail schemes and the importance of counting them in carbon budgets.
This paper discusses the issue of Impact Assessments required for measures proposed under the IMO’s Initial IMO Strategy on reduction of GHG emissions from ships. It has been prepared to provide background information and analysis to Pacific high ambition delegations participating in ongoing negotiations at the International Maritime Organisation negotiating Greenhouse Gas emission reductions for international shipping. At the same time, the content may be useful to inform other delegations and actors.
The issues surrounding Impact Assessments will arise throughout the 2022 IMO negotiating sessions. The IMO Secretariat has designated a ‘lessons learnt’ exercise, commencing with an Ad Hoc Experts Working Group prior to ISWG11. Pacific states are heavily invested in this issue. Pacific SIDS will clearly be amongst the most heavily affected if abatement measures for shipping emissions generate negative impacts on states. At the same time, these states are pressing for the highest ambition measures possible to maintain a 1.5 agenda as quickly as possible.
It is important that delegations and negotiators are fully appraised on the origins of this discussion at IMO (and its more broader context) as the definitions applied this year will have far reaching consequences for the matters of prime concern to the Pacific, in particular the level of ambition and the definition of “equitable transition”.