Energy efficiency measures can slash the cost of shipping’s transition by up to $220B, World Bank report finds
A recent World Bank report reveals that enhancing energy efficiency in the maritime industry could lower the total cost of the energy transition by up to $220 billion annually. While improving energy efficiency is crucial, the report emphasizes that it alone cannot fulfill the International Maritime Organization’s (IMO) policy objectives. The adoption of green fuels, such as methanol and ammonia, will also be essential by 2040 and 2050, despite their higher costs compared to traditional fuels.
Investment in Energy Efficiency Yields Significant Savings
The report, titled “Keys to Energy-Efficient Shipping,” outlines that an annual investment of approximately $35 billion in energy efficiency measures could lead to savings of up to $270 billion in green fuel costs each year. These investments not only mitigate the impact of fluctuating fuel prices but also play a vital role in the transition to greener fuels, which are currently more expensive. By prioritizing energy efficiency, the maritime sector can significantly reduce fuel consumption and overall transition costs.
Through a comprehensive analysis of key vessel segments, including bulk carriers, container ships, and tankers, the report identifies substantial potential for both technical and operational efficiency improvements through 2050. It highlights short-term operational strategies, such as optimizing port calls and voyage speeds, alongside medium-term innovations like wind-assisted propulsion, which can lead to considerable efficiency gains. However, the report also points out persistent economic, behavioral, and organizational barriers that hinder the implementation of these measures, illustrated through case studies on port call optimization and wind-assisted propulsion.
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According to the findings, enhancing energy efficiency could reduce global shipping’s greenhouse gas (GHG) emissions by up to 40% by 2030, surpassing the current interim targets set by the IMO. The report indicates that technical and operational measures could achieve a reduction of 23-39% in absolute GHG emissions by 2030 compared to 2008 levels, exceeding the IMO’s baseline ambition of 20% and potentially reaching up to 30% reduction. Notably, the most significant short-term potential lies in reducing ship speeds, which could lower GHG emissions by 5-15% while optimizing speeds for congested ports could yield additional savings.
Cost-Effectiveness of Energy Efficiency Measures
Beyond 2030, the report anticipates that technical measures, including changes in ship design and the integration of new equipment, will play an increasingly important role in reducing emissions. While energy efficiency improvements alone may not meet the IMO’s 2050 targets, they are expected to complement the transition to green fuels and decrease reliance on fossil fuels. Remarkably, about half of the emissions reductions achieved through energy efficiency measures are considered cost-effective, potentially cutting 250 million tons of emissions at no cost by 2030. These measures could also offset shipping fuel costs, making them financially viable.
For the major contributors to shipping GHG emissions—bulk carriers, container ships, and tankers—most energy efficiency measures are deemed cost-effective. However, the marginal abatement costs vary by ship type due to differences in design and operational requirements. Tankers face higher installation costs and technical limitations in speed reduction, making their abatement less cost-effective. Conversely, bulk carriers are well-suited for wind-assisted propulsion, while container ships demonstrate high effectiveness in speed reduction strategies.
