The Global Eye in dialogue with the ‘spokesperson’ of the High Level Panel for a Sustainable Ocean Economy (Ocean Panel) on the contents of the report ‘The Ocean as a Solution to Climate Change: Updated Opportunities for Action’ (coordinated by Oliver Ashford – World Resources Institute).
Can you explain to our readers the importance of a sustainable ocean economy to limit the impact of climate change?
The ocean and its economy are essential players in mitigating and adapting to climate change. Based on the latest research commissioned by the Ocean Panel, actionable ocean-based climate solutions can deliver up to 35% of the annual greenhouse gas (GHG) emission cuts needed in 2050 to limit global temperature rise to 1.5°C. Emission reductions of this magnitude are equivalent to four times the annual emissions European Union countries.
This analysis is based on seven solutions that are ready to implement:
- Scaling ocean-based renewable energy
- Decarbonising ocean-based transport
- Conserving and restoring coastal and marine ecosystems
- Utilising low carbon food from the ocean
- Developing marine carbon dioxide removal and carbon capture and storage
under the seabed
- Decarbonising ocean-based tourism
- Reducing offshore oil and gas extraction
Offshore renewable energy is a major opportunity area and ready-to-implement solutions can provide emissions-savings of up to 3.60 GtCO2e per year by 2050 (about 27% of the ready-to-implement emission reduction potential identified).
Total pledges for offshore wind development have approximately doubled in the last four years, bringing targeted offshore renewable energy deployment to up to 2000GW by 2050 and expanding the potential for offshore renewable generation to displace fossil fuel generation and emissions, contributing up to 3.60 GtCO2e per year in mitigation potential by 2050.
Cumulative investments could make offshore wind energy the most important ocean-climate mitigation solution by 2030.
The new report emphasises the significant role the ocean can play in offering sustainable and effective solutions to the global climate and biodiversity crises. However, time is running out to explore, test and invest in these options to realise their full potential. The solutions presented in the report are also not a silver bullet and must be accompanied by deep cuts in emissions across all terrestrial sources of GHGs.
In particular for coastal countries, what would be the benefits of an ocean-based climate policy?
An Ocean Panel report from 2020 demonstrated that investing $1 in key ocean actions can yield at least $5 in global benefits, often more, over the next 30 years. Specifically, investing $2 trillion to $3.7 trillion globally from 2020 to 2050 across four key areas—conserving and restoring mangrove habitats, scaling up offshore wind production, decarbonising international shipping and increasing the production of sustainably sourced ocean-based proteins—would generate $8.2 trillion to $22.8 trillion in net benefits, a rate of return on investment of 450–615 percent. Ocean based climate solutions offer a multitude of benefits, for example marine conservation and restoration mitigation options can not only reduce GHG emissions but generate many economic, social, environmental and governance co-benefits (Schindler Murray et al. 2023).
Investment in infrastructure and technology is needed. In which technologies in particular?
Taken from The Ocean as a Solution to Climate Change: Updated Opportunities for Action (pp103 – 105)
Ocean-based renewable energy
The global offshore wind market grew by 8.8 GW in 2022, attracting $31 billion of investment, and is expected to add 35.5 GW in 2027 (GWEC 2023). Cumulative investments will make the sector the most important ocean-climate mitigation solution by 2030 (IRENA 2023). Offshore wind will install more than 25 GW in a single year for the first time in 2025, requiring investment into new industrial capacity, training and skills. For finance to be sufficiently accessible, it will require:
- Reform of the lending practices of development finance institutions, including being able to deploy concessional funding for projects in countries that may be in debt distress (IEG 2023).
- Strengthening instruments and procurement processes to channel public finance to key infrastructure such as transmission lines, including through equity and direct ownership of assets.
- Assisting developing countries to put in place a robust strategy and regulatory framework for offshore wind deployment (such as put in place by Brazil, Egypt, India and Morocco), including in terms of marine spatial planning and marine biodiversity protection.
Other marine energy sectors have not reached the maturity required for attracting traditional finance and are likely to continue to deliver energy that is more expensive, except for very specific applications, given limited economies of scale and technical challenges (IRENA and CPI 2023).
The shipping sector has identified several pathways for the transition to net zero, including the Clydebank Declaration for Green Shipping Corridors, the IMO Initial Strategy of 2018 and other low-carbon shipping initiatives. Estimates based on IMO Initial Strategy ambitions put the total additional capital needed for reducing carbon emissions from shipping by at least 50 percent by 2050 at $1–$1.4 trillion, with over 80 percent going to infrastructure investment on land (Global Maritime Forum 2020). Based on these estimates, if shipping was to fully decarbonise by 2050, this would require extra investments of approximately $400 billion over 20 years, making the total investments needed between $1.4–1.9 trillion overall (Global Maritime Forum 2020). This includes the capital required to construct land-based bunkering infrastructure of zero carbon emission fuels, and related investment into research, which will require around $40 billion annually by 2030 (Baresic and Palmer 2022). The primary challenge is to align shipping fully with the Paris Agreement. For example, the global fleet running on LNG risks financial losses in stranded assets of $850 billion by 2030 (Fricaudet et al. 2022). The full value of this risk would not be realised if the LNG-fuelled vessels were retrofitted to run on zero emissions fuels, such as ammonia. In this scenario, the financial loss is estimated at around 15–25 percent of the vessel’s value, between $129–$210 billion (Gerretsen 2022).
The key mechanism for unlocking Paris-aligned mitigation finance for ocean transport (and cruise tourism) is the development of clear and effective policy. The outcome of the IMO’s Revised Strategy (IMO 2023c), committing the IMO to stringent GHG reduction targets, the revision of existing GHG policy measures, and the development of new GHG policy measures can create a business case for investment and significant alignment for new and existing private finance, with ‘public’ finance for ocean transport GHG mitigation generated through IMO GHG pricing, as well as in national and regional policy. This will need to rapidly develop as there is still limited evidence of final commitment to zero emissions technology investment for the sector, as well as limited evidence for investments into early-stage technology businesses that can help transform the sector. These areas require targeted, knowledgeable impact and venture finance to initiate investment, but ultimately, to achieve the scaling needed for this sector’s transition, there is likely a need for the lower cost capital from institutional investors. The sector has access to a wide range of traditional finance mechanisms offering multiple pathways to deliver appropriate funding structures.
Marine carbon dioxide removal and carbon capture and storage
Given the complexities surrounding marine carbon dioxide removal and carbon capture and storage outlined in this report, it is critical that funding in this area be directed towards science, research and governance to provide a solid knowledge base before any future finance approach. Predictable carbon sequestration technologies are of significant interest to hard-to-abate industries and are likely to attract commercial finance over time.