MTBS report commissioned by IAPH highlights significant investments in port infrastructure needed in developing countries

As discussions on a mid-term market-based measure continue at this week’s intersessional meeting of the IMO Working Group on Reduction of GHG Emissions from Ships (ISWG-GHG 17), a document has been submitted by IAPH to the IMO presenting the findings of a study it commissioned from Maritime & Transport Business Solutions (MTBS) to make on port climate adaptation and decarbonisation investment needs of developing nations.

The study explored the current state of port adaptation and decarbonisation infrastructure in developing nations, with case studies from Brazil, India, Indonesia, Kenya and the Solomon Islands, and identified the investments needed to ensure a fair and equitable transition.

In summary, the report reached the following conclusions:

1. Port infrastructure financing is already challenging today, with most bankable projects requiring a combination of a positive socio-economic impact for the region as well as a bankable business case.

2. Green energy from solar and wind will provide several developing nations with a new opportunity to produce, use/and or export green energy to high energy demanding nations. Green Hydrogen generated from renewable energy is earmarked as a base energy source to replace fossil fuel dependency.

3. The sector must reach consensus regarding the regulatory framework and GHG mitigation measures of the future as soon as possible to avoid risk aversion to investing in technology which, eventually may not become widely adopted.

4. Any share of funds generated from a market-based measure will require decisions based on :

• Level of dissemination (country, port, project)

• A sound methodology for gauging viable investments, with a minimum of climate change vulnerability

• A region’s dependency on maritime transport

• Cargo value and type (economic benefit of increased investments)

• Increase of transport costs due to the charging scheme

• Food security

• Adaptation relative to required mitigation investments

• Cost-effectiveness (such as adapting to rebuild)

• The overall related socio-economic impact and development

The examples in the study demonstrate investments in port adaptation (resilient infrastructure) and decarbonisation infrastructure varying widely depending on port size, location, existing infrastructure, activities, and prior adaptation and mitigation plans. That said, based on estimations, it is predicted that the aggregate total investment needs for ports in developing nations lies between USD 55 and 83 billion*.

Ports in developing countries tend to prioritise adaptation (resilience) investments over mitigation (decarbonisation) investments. The higher the vulnerability and the smaller the port, the more prominent this development. The small island ports in Indonesia and on the Solomon Islands are the most outspoken on this. This is problematic, as adaptive measures like building storm barriers have no underlying economic business case except the potential protection from future economic loss due to disruption of the activities. The study also found that costs of climate adaptation are a magnitude higher than those associated with mitigation.