A report produced by Marine Capital, with the support of UMAS and Lloyd’s Register (LR), estimates that approximately £75bn of investment over the coming three decades will be required for the UK’s domestic maritime sector to transition to net zero.
he report, “UK Domestic Shipping: Mobilising Investment in Net Zero”, identifies funding mechanisms that can be applied immediately to unlock untapped investment capital to finance this transition, without waiting for the introduction of carbon pricing or the selection of a ‘winning’ zero emission fuel solution.
It also highlights, that “attracting new sources of capital will be key to the industry’s energy transition.”
What is more, the study identifies the vessels which comprise the UK domestic and short-sea shipping fleets and provides a profile of these fleets, including a breakdown of emissions by different vessel types.
This analysis shows that the largest source of emissions come from a relatively small subsector of vessels, providing the potential for targeted measures
Both investment and clear, coordinated policy support will be required to overcome the various barriers that currently hinder the sector’s decarbonisation transition. These barriers include uncertainty regarding future demand for and supply of clean fuels, lack of clarity over the evolution of the policy and regulatory environment and limited access to funding by many stakeholders. Identifying areas of priority will be key to the sector’s successful navigation of the net zero pathway over the coming two decades.
Moreover, institutional investors, who together represent over $80 trillion in assets, could be a viable source of funding. However, government support will be needed to help them overcome some of the hurdles currently impeding their participation.
Through the use of case studies, the report considers how institutional capital can be unlocked at scale through different types of funding mechanisms and the appropriate supporting government policy.
The case studies highlight particular areas which are appropriate for priority attention. Ferries and Ro-Ro vessels, which account for 10% of vessels but 50% 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 which service this market are also good candidates for targeted measures.
In assessing the appropriate measures and structures that could be applied to the UK’s domestic maritime sector, the report also considers the lessons that can be learned from other comparative regimes, including initiatives such as Green Corridors.
Shipping’s decarbonisation presents many challenges. Domestic shipping is enormously diverse, so merely getting to grips with that diversity was a key element in framing the report
said Tony Foster, CEO of Marine Capital.
In addition, Dr. Carlo Raucci, Decarbonisation Consultant, LR Maritime Decarbonisation Hub, noted that said “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.”