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Some states argue in IMO negotiations that the Net-Zero Framework is too costly a measure to implement on a global basis. However, this reasoning is based on the presumption that maintaining the status quo is somehow ‘free’.
This analysis compares estimates of the cost of the climate crisis to GDP in 2050, shipping’s notional contribution to that cost, and Net-Zero Framework implementation scenarios based on the IMO’s own cost modelling.
What’s covered in the report?
- A review of different estimates from studies attempting to calculate the global cost of GDP resulting from the climate crisis in three key regions: Latin America, the Caribbean, and Africa.
- A brief assessment of the specific vulnerabilities of the economies of these three regions to the impacts of climate change.
- A critical articulation of the limits of GDP calculations and what that means for these comparisons.
Our findings
Quantifying the economic impacts of climate change is notoriously difficult. As such, the IPCC’s latest report presents a range of estimates, as opposed to a singular value, while also suggesting that the damage is likely to be higher than previously assumed.
More recent research suggests that earlier studies may have underestimated the macroeconomic costs of climate change by a factor of three to five. Many of these economic impacts are also expected to intensify beyond the 2050 time horizon considered in these briefings.
The briefings therfore provide a deliberately conservative comparison of costs associated with implementing the Net-Zero Framework and those resulting from the climate crisis. In doing so, they likely overstate costs of the Framework while excluding the wider economic and strategic opportunities it could unlock, including support for the maritime transition.
Even on this narrow basis, the Net-Zero Framework represents strong value for money. Most estimates included in the analysis conclude that the cost of inaction is likely to exceed the investment required to implement the Framework.
We know that the maritime transition bears a cost, but if managed through effective global regulation it can also create opportunities – both through creating the fiscal enabling environment that can accelerate private sector investment, and through the distribution of compliance revenues that are raised as a consequence of the regulation. These opportunities are deliberately excluded from this analysis but are explored in more detail for the Caribbean region in our report: Advancing the maritime energy transition in the Caribbean.
Given the best available estimates of the cost of inaction on climate change and the cost of action on international shipping, as well as the severe consequences of unchecked climate change, adopting the Net-Zero Framework should be regarded as a bare minimum response by member
