A new report by Wärtsilä finds the cost of sustainable marine fuels could align with the price of conventional bunkers by 2035 with the support of ‘decisive emissions policy’, such as carbon taxes and emissions limits.
The report, titled ‘Sustainable fuels for shipping by 2050 – the 3 key elements of success’, says that the EU Emissions Trading Scheme (ETS) and FuelEU Maritime Initiative (FEUM) will see the cost of using fossil fuels more than double by 2030, and by 2035, they will close the price gap between fossil fuels and sustainable fuels for the first time.
In 2023, the International Maritime Organization (IMO) set a target of achieving net zero emissions by around 2050. Existing decarbonisation solutions, such as fuel efficiency measures, could cut up to 27% of emissions. Wärtsilä's report argues that sustainable fuels will be a critical step in eliminating the remaining 73% but radical action is needed to scale them.
The shipping industry is facing a ‘chicken and egg’ challenge in its choices of alternative fuels but Wärtsilä highlights that it is difficult for suppliers to scale production without clear demand signals.
The company has produced new modelling that shows a timeline of which fuels are likely to become widely available on a global scale, when and at what cost. To accelerate this timeline, the report argues that decisive policy implementation, industry collaboration, and individual operator action must coalesce to scale the production of these fuels.
Wärtsilä’s modelling shows sustainable fuels will be 3-5 times more expensive than today’s fossil fuels in 2030. As ETS and FEUM show, policy is key to closing the price gap, says the company, and its report argues that policymakers should:
• Maximise certainty: Set an internationally agreed science-based pathway for phasing out fossil fuels from the marine sector, in line with IMO targets.
• Boost cost competitiveness: Adopt a global industry standard for marine fuel carbon pricing.
• Collaborate: Increase global collaboration between governments on the innovation and infrastructure necessary to deliver sustainable fuels at scale worldwide.
Industry collaboration: The sector must collaborate with stakeholders from inside and outside shipping.
The report also calls on industry to:
• Pool buying power: Initiate sector-wide procurement agreements to pool demand from multiple shipping operators.
• Collaborate with other sectors: Convene with leaders in aviation, heavy transport, and industry to establish a globally recognised framework for the production and allocation of sustainable fuels.
• Share skills: Establish an industry-wide knowledge hub for the purpose of sharing expertise, skills and insights.
Roger Holm, President of Wärtsilä Marine & Executive Vice President at Wärtsilä Corporation, commented: ‘Achieving net zero in shipping by 2050 will require all the tools in the toolbox, including sustainable fuels. As an industry, we must focus on coordinating action across policymakers, industry and individual operators to bring about the broad system change required to quickly and affordably produce a mix of sustainable fuels.
‘Policy in Europe is showing just how impactful action at the international level can be, closing the cost gap between fossil- and low-carbon fuels for the first time.’
The report can be accessed here
