Shipping hit with $26 billion every year by climate change

A new report reveals that the global shipping and port industry is susceptible to billions of dollars in infrastructure damage and trade disruption from climate change impacts.

Authored by RTI International for the Environmental Defense Fund (EDF), Act Now or Pay Later: The Costs of Climate Inaction for Ports and Shipping explores data on climate-related disasters and projects the cost of future damages to the industry. Without ambitious action to reduce emissions, climate change impacts could cost the shipping industry up to $25bn every year by the end of the century.

Due extensive growth in combination with shipping’s reliance on heavily polluting fuels, the shipping industry has become a large emitter of greenhouse gases, currently accounting for roughly 20 per cent of global emissions from transportation. Meanwhile, from sea level rise to increased storm activity to inland flooding, climate change threatens shipping infrastructure and operations.

Based on past impacts and anticipated climate change scenarios, the report projects that the additional annual damages to port infrastructure could reach nearly $18 by 2100. Storm-related port disruptions could add another 7.5bn each year, reflecting the economic losses incurred by ports, shippers, and carriers due to port closures and the costs to shipping customers. Together, these added future costs due to climate change are roughly equivalent to the total annual net earnings for the container port sector in 2019.

“While our report uses the best information available to paint a picture of the true economic cost of climate change on international shipping, the reality is that these figures are likely underestimating the total scale of the consequences,” said George Van Houtven, director of ecosystems services research at RTI. “Considering the unpredictable volatility of climate change and the immense complexity of the shipping sector, we simply need more data to show the full picture. However, the available evidence strongly indicates that the costs will be great.”

To avoid this the industry will need to take several steps now to advance the transition to green shipping and reduce future climate change costs, including committing to full decarbonisation by 2050, in line with the Paris Agreement, supporting a market-based mechanism to reduce shipping emissions at the International Maritime Organization, investing in zero-emission fuels and technology and supporting an equitable transition for the shipping industry to ensure the brunt of damages and adaptation costs do not disproportionately fall on developing nations.

Many shipping leaders have already endorsed a Call to Action through the Getting to Zero Coalition, which aims for the development and deployment of commercially viable deep sea zero-emission vessels by 2030.

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