Study: Running ships on green fuels has minimal impact on consumer goods prices

Running ships entirely on green hydrogen-based fuels (e-fuels) would add less than €0.10 to the price of a pair of trainers and up to €8 for a refrigerator, a new study on the cost of decarbonising European shipping shows.

This briefing assesses the likely cost increase in seaborne transport in a hypothetical fully decarbonised scenario and, more specifically, if the ambition of the proposed FuelEU Maritime (FEUM) and the EU ETS is substantially strengthened. 

Based on a real-world example of a voyage of an average large container vessel sailing between China and Belgium, the analysis concluded that the likely impact on seaborne transport costs would be negligible, according to Transport & Environment (T&E).

“Green shipping would add less than 10 cents to a pair of Nikes. This is a tiny price to pay for cleaning up one of the dirtiest industries on earth. In a year where shipping companies are making bigger profits than Facebook, Google, Amazon, and Netflix combined, it is right to question whether shipping companies are doing enough,” Faig Abbasov, shipping director at T&E, commented.

The shipping industry is the backbone of global trade. However, to date, the industry has been slow to decarbonise and it remains one of the heaviest polluting industries in the world. A central argument against ambitious green measures is that it would push up prices for consumers, T&E said.

The study shows that even in the most extreme case of a ship running on 100% green fuels, prices would not rise significantly. That is if wealthy cargo carriers were to pass on the costs to consumers. This reflects the economies of scale in global supply chains that are not hyper sensitive to shipping fuel costs.

European policymakers, who are currently voting on two key proposals to clean up shipping, should be emboldened by this, T&E believes.

The first is a historic extension of the carbon market to shipping which was backed last week in the European Parliament and is now in the hands of national governments.

The second is a shipping fuels law which will be voted on in July.

Using the EU’s existing proposal to charge carbon pollution from ships, combined with the proposal to mandate small amounts of green e-fuel use by 2030, T&E analysed what effect this would have on container shipping prices and consumer goods coming from China.

In the worst case scenario, cargo companies would face increased transport costs of 1% to 1.7%.

However, on an itemised basis, the price of consumer products would barely budge. A pair of trainers would cost just €0.003 more, a television €0.03 and a refrigerator up to €0.27 more.

“A decade ago, the only hope of decarbonising shipping was halting global trade itself. Now we have the technology, but what is lacking is a market signal for green hydrogen producers,” Abbasov continued.

“As a world leader in shipping, the EU should set an ambitious green e-fuel mandate that guarantees hydrogen fuel suppliers a market. Green shipping is possible. It is a question of political will,” he concluded.