Marine energy demand to fall if IMO introduces more policies to meet 2050 goal: IEA

Marine energy demand will fall in the long run if the International Maritime Organization provides more policy incentives to reach its net-zero target by 2050, the International Energy Agency said Oct. 16, even as shipping disruptions in the Red Sea have boosted short-term bunker demand.

In its latest annual World Energy Outlook, the Paris-based energy watchdog said energy consumption by the shipping sector will fall from 11 exajoules in 2023 to 10 Ej in 2030 and 2040 before further decreasing to 9 Ej in its Announced Pledges Scenario, or APS.

The scenario assumes that industry participants can meet the IMO’s targets to reduce life-cycle greenhouse gas emissions from international shipping by 20%-30% by 2030 and by 70%-80% by 2040 against 2008 levels before transitioning to net-zero shipping close to 2050.

CO2 emissions from shipping will drop from 856 metric tons in 2023 to 619 MMt in 2030, before further decreasing to 254 MMt in 2040 and to 131 MMt in 2050, according to the IEA’s forecast for the APS.

Analysts said maritime decarbonization requires a low-carbon transition of global bunker mix, currently dominated by oil, and the IEA expects ammonia and hydrogen together to make up 4% of the mix, low-emission methanol to make up 8%, and bioenergy to make up 10% by 2030 in the scenario.

“The reduction in global oil demand in road transport also contributes to lower emissions from shipping by decreasing oil shipments,” the IEA said, adding that lower global oil demand in the APS would cut energy demand from international oil tankers by 15%.

Regulatory talks

The comments have come as IMO member states are facing tough negotiations over new GHG standards for marine fuels and a pricing mechanism for emissions, which are due to be finalized next year for implementation in 2027.

Many shipping professionals said robust regulations would be needed to promote the use of “green” fuels produced by sustainable means, currently much more expensive than conventional, oil-based fuels due to their scarcity.

The September monthly average delivered price for 0.5% sulfur marine fuel oil, the most prevalent bunker type, was $12.595/Gigajoule in Rotterdam, according to Platts data from S&P Global Commodity Insights. Gray methanol was priced at $18.511/Gj on average, and industry estimates suggest sustainable methanol could be at least two times more expensive. Renewable ammonia for delivery into Northwest Europe on a cargo basis stood at $49.841/Gj in September.

In its Stated Policies Scenario, which takes into account existing policies, the IEA said marine energy demand will rise from 11 Ej last year to 12 Ej in 2030 before further hikes to 13 Ej in 2040 and 14 Ej in 2050.

“Emissions reductions in shipping [is driven] … in part by policy changes,” the IEA said, suggesting that IMO regulations could also drive energy efficiency improvement in shipping.

Suez Canal diversions

Separately, the IEA said bunker demand has seen support from incremental fuel consumption during ship diversions from the Suez Canal to sail around Africa this year.

Since December 2023, Iran-backed Houthi rebels have launched over 100 attacks on merchant ships around the Bab al-Mandab Strait claiming to support the Palestinians, prompting many ship operators to choose longer, safer routes.

Ton-mile demand would increase by nearly 10% “if all international ships were to avoid or lose access to the Suez Canal,” according to the IEA, estimating that oil demand in shipping could rise by 330,000 b/d in 2024 consequently.

Daily ship transits via the Suez Canal averaged 28 in the week ended Oct. 8, according to the latest IMF PortWatch data, nearly two-thirds lower than the year-ago level of 76.