by Lloyd's List
10 October 2024 (Lloyd's List) - THE International Maritime Organization’s 2023 greenhouse gas strategy aims to phase out, as a matter of urgency, emissions related to shipping as soon as possible.
But it contains a critical codicil of promoting a “just transition” while focussing on reaching net zero by 2050.
“Smaller economies generally incur higher maritime transport costs,” said Frank Luisman, senior partner at consultants MTBS.
“These countries often require enhancements to their port facilities to improve services, accommodate larger vessels and reduce waiting times.”
Introducing a carbon pricing element would have a direct affect on trade costs for these countries that would be more significant than that felt by more developed economies, he added.
The effect of an increase in maritime logistics costs can be marginal on global trade flows and GDP. But projections show that an effect of up to 1% of the GDP of individual countries and less than 0.1% of global GDP, Luisman said.
“It is therefore extremely important that the financial resources generated by the pricing mechanism be reinvested to facilitate a just transition supporting ports in developing countries to reach net zero and to protect communities against the onslaught of climate change.”
A study commissioned from MTBS by the International Association of Ports and Harbours gives an analysis of the investment gaps developing countries face.
“The global push towards a sustainable future has placed unprecedented pressure on maritime infrastructure in developing countries. The ports in these countries serve as vital nodes for the national trade network that drives economic growth. Sometimes they are the only lifeline for the local economy.”
Nevertheless, these ports are increasingly challenged by the dual challenges of reducing emissions and enhancing resilience to climate change.
Among the findings in the report were the fact that for ports in smaller economies, survival comes first.
“Ports tend to prioritise resilience investments over decarbonisation investments. The higher the vulnerability, the smaller the port, the more prominent this is.
Size also matters. “Small ports are more vulnerable to shocks than large ports, both in the case of climate shocks and investment capabilities required to mitigate.
The allocation of funding for smaller ports is also challenging.
“The core challenge regarding funding decision sis how to identify which investments require support and how to assess not just the societal value but also which countries need help to the most.”
There was also a challenge in where to draw the investment line, given the complexity of both the port industry and the effects of climate change.
“The cost of pathways to resilience scale exponentially,” Luisman said.
“Capital for infrastructure is becoming increasingly scarce and protective measures are very costly. Hence strategies to support the most vulnerable ports should be seen over the investment lifetime. It is often more cost effective to build a completely new facility and to move the port equipment to a new location once the terminal is ready rather than upgrading an existing one.”
