COP27 Side Event: Producing future marine fuels - Opportunities for scaling up renewable energy production in developing countries

Statement by Rebeca Grynspan, Secretary-General of UNCTAD

Dear Lim Kitack, Secretary-General of IMO, Dear Friend,

Dear Nicolas Peltier, Global Director of Transport of the World Bank, Dear Francesco La Camera, Director-General of IRENA (tbc)

Dear Participants,

The transition to low carbon economies is an imperative – for all countries and sectors, including maritime transport.

While maritime transport is the most “carbon efficient” mode of transport, international shipping still contributes 2.9 per cent of global CO2 emissions.

The problem is that shipping remains heavily dependent on oil.

As it currently stands – with available infrastructure, technology, and financial resources – shipping is not ready yet to switch to cleaner sources.

Yet, we need maritime transport so much.

COVID and the war in Ukraine have demonstrated how vital reliable maritime transport networks are for supply chains and trade.

It is also thanks to shipping that the grain harvested in Ukraine and Russia could leave the ports and be transported to where it is much needed.

So how can we transition to low and zero-carbon fuels in maritime transport? In the short run, the focus is on how to reduce carbon fuels.

Gas, in the form of liquified natural gas, provides an alternative to oil. Yes, it is not a perfect solution but can be seen as a transition fuel.

And it has already gained traction.

However, the future hinges on investing in alternative non-fossil fuels. This is not only a challenge, but it can also be an opportunity.

Many developing countries have much potential to participate in the production and commercialization of non-fossil fuels, such as those based on solar, wind, geothermal, hydro, or biomass energy.

Many developing countries can also develop bunkering infrastructure to distribute non- fossil fuels to ships around the world.

Ports play key roles in the green maritime transition as they serve as energy hubs providing shore-side electricity, and infrastructure for storing and fueling ships with future fuels.

Ports will support the first movers and establish green corridors. But of course, there are challenges.

Uncertainty related to the future fuel and propulsion technologies can delay investment decisions, including by shipowners. In fact, fleet age is increasing, and fleet growth is below potential.

This delays the adoption of alternative fuels.

Moreover, alternative fuels remain at a price disadvantage.

There is still not sufficient investment, including in research and development. There are also market barriers, and insufficient regulation on safety for handling and managing new fuels.

And it is a question of finance.

Developing countries need access to finance to have the right incentives and ability to invest in the transition.

This requires innovative financing mechanisms, including public-private partnerships, climate finance and instruments from multilateral development banks.

Also, revenues generated from carbon pricing instruments could be “recycled” to support the deployment of zero-emission fuels and technologies.
 

Ladies and Gentlemen,

We need a just transition to low and zero carbon fuels.

This means that smaller players and less advanced economies need support to be able to participate in relevant efforts and share the associated benefits.

UNCTAD supports developing countries in these processes with trade and transport facilitation and guidance on smart ports.

I cannot emphasize enough this point: we are in a critical time for energy policy and energy politics.

The current crises may push us in the wrong direction and backwards in our commitment to sustainable development.

We cannot afford moving in that direction.

We need the efforts of all to support decarbonization.

We must seize this opportunity! An opportunity for collaboration, coordination, and cooperation.

In this spirit, I wish you a fruitful event.

Thank you.