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ICCT study: China domestic low-carbon marine fuel regulation needed by 2030

01 Jul 2022

An International Council on Clean Transportation (ICCT) working paper published in June 2022 found it was essential for China’s coastal shipping sector to implement low-carbon marine fuel regulations no later than 2030 – in order for the country to meet its 2060 carbon neutrality goal.

To date, the world is still waiting to learn what “carbon neutralization” means for China, and what an action plan for reaching this target by 2060 will look like. 

The ICCT paper takes a first look at China’s domestic coastal shipping sector and provides recommendations for actionable long-term decarbonisation pathways designed to avoid exceeding its current share of transportation-sector CO2.

If low-carbon marine fuel regulations are delayed until 2046 after expiration of mandatory energy efficiency standards, the required rate of fuel carbon intensity reduction would be dauntingly high for the industry, said the report. 

This was one of the key findings of the study in the working paper Decarbonizing China’s coastal shipping: The role of fuel efficiency and low-carbon fuels, which was written by authors Xiaoli Mao and Zhihang Meng. 

Using 2019 CO2 emissions, energy consumption and activities as a baseline for the report, the authors projected those out to 2060 for a 2°C-aligned scenario, 1.5°C-aligned scenario and business as usual future.

ICCT study: China domestic low-carbon marine fuel regulation needed by 2030

“We considered two broad categories of policy actions in addition to adopted policies to reach the goals of 2°C-aligned and 1.5°C-aligned scenarios: improving energy efficiency and reducing the carbon intensity of shipping fuel,” said the authors in the report. 

“Finally, because fuel carbon intensity regulations (or low-carbon fuel regulations) are crucial to decarbonising the shipping industry and are currently less mature and more costly than energy efficiency improvements, we considered two different implementation schedules for each of the 2°C-aligned and 1.5°C-aligned scenarios, while keeping their targets intact.”

ICCT study: China domestic low-carbon marine fuel regulation needed by 2030

In 2019, China’s coastal shipping sector emitted about 45 million tonnes of CO2, or roughly 4.5% of total CO2 emissions from China’s transportation sector. 

“With no additional policies, CO2 emissions from China’s domestic coastal shipping would more than triple to more than 162 million tonnes in 2060,” said the report on another finding. 

With the help of mandatory energy efficiency standards as well as low-carbon fuel regulations, CO2 emissions from China’s domestic coastal shipping could peak by 2040 and fall significantly by 2060. 

As such the report proposed two possible pathways for achieving this:

  • With mandatory energy efficiency standards tightened every five years between 2025 and 2045 for newbuild ships, and with low-carbon fuel regulations slowly phasing in from 2030, CO2 emissions could peak by 2040 and decrease by 56% in 2060 relative to the 2019 baseline, which is aligned with the 2°C-target set for the transportation sector in the ICCSD report. The average carbon intensity of the fleet could fall by 79% relative to the 2019 baseline.
  • With more stringent mandatory energy efficiency standards to be implemented between 2025 and 2045, and with low-carbon fuel regulations phasing in five years earlier (beginning in 2025), CO2 emissions could peak by 2035 and decrease by 83% in 2060 relative to the 2019 baseline, which is aligned with the 1.5°C-target set for the transportation sector in the ICCSD report. The average carbon intensity of the fleet could fall by 92% relative to the 2019 baseline.

The authors noted that their model will need to be recalibrated to see if the proposed measures will be sufficient to put industry on the track to true decarbonisation, once the official action plan to reach the sector’s 2060 target is announced. 

“Although we highlighted the importance of low-carbon fuel regulations, we did not analyze the availability or cost of low carbon marine fuels in China. 

“Future work will be needed to understand the marine fuel market in China, to develop certification standards for low-carbon marine fuels, to analyze the cost of developing a fuel supply chain for them, and to identify policy options to promote first movers,” they said. 

The full working paper Decarbonizing China’s coastal shipping: The role of fuel efficiency and low-carbon fuels can be downloaded from the ICCT website here.

 

Photo credit: International Council on Clean Transportation (ICCT)
Published: 1 July, 2022

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