PROMINENT shipping lender Danish Ship Finance says if societal clean technologies and net-zero targets are met, there will be fewer ships and less business activity as a result of decarbonisation.
Shipping carries 90 per cent of all traded goods, and draws business from every sector through corporate customers with large volumes, said the Danish Ship Finance study.
Some of the biggest customers have announced plans to cut their emissions to net zero by 2040, a decade ahead of the Paris Agreement goal, reports Fort Lauderdale's Maritime Executive.
When that happens, "cargo types, trading patterns and parcel sizes will likely change when these corporate players adapt their behavior to reach their targets," predicts Danish Ship Finance. These behavioral changes could include higher energy efficiency, less manufacturing waste, shifting to new energy sources and relocating industrial activity.
As an example, the report points to potential changes in the steelmaking sector, which accounts for 7-9 per cent of all global greenhouse gas emissions.
Making steel requires moving iron ore and coking coal, in vast quantities. Together, these two commodities account for a third of all dry bulk volumes (28 per cent and five per cent, respectively).
But several high-end steelmakers are now experimenting with hydrogen instead of coke in smelting. If green hydrogen eats into the market share of coke, dry bulk volumes will fall.
If the new technology allows the steelmaker to locate next to an iron ore mine - for example, in Western Australia, where solar potential, wind resources and iron ore coexist in the same place - there would be no need for seaborne transport of the ingredients.
This scenario would take decades to develop, but it is not entirely hypothetical: Australian iron ore giant Fortescue is investing in green steelmaking technology, and one of the world's biggest green hydrogen projects is planned just a few hundred miles from Fortescue's mines in the Pilbara region.
The overall trend towards higher energy efficiency in everyday life - higher fuel economy, better insulation, less energy-intensive appliances - could also have an impact on demand for energy commodities.
Less dramatic but still impactful, a general shift to a circular economy could reduce the amount of new material shipped on transoceanic routes, according to Danish Ship Finance, while boosting short-haul transport of waste materials for reuse.
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