Energy transition has a global shipping problem, report finds

A new report from the National Center for Energy Analytics examines a little-studied problem for a so-called U.S. green-energy transition: Where will the ships come from to ship critical minerals and products from overseas?

Using International Energy Agency (IEA) scenarios, the NCEA estimates that the transition-driven demand for more minerals and materials will require the world to nearly double shipyard capacity to carry the new tonnage by 2035. The NCEA cites American Experiment’s October 2024 report “Mission Impossible” as one think-tank examining the feasibility of estimates of future mineral demand.

The IEA’s estimates of critical and rare earth mineral demand suggest increases of four to six times the volume of 2020. The NCEA points out that the IEA “ignored the global demand growth for traditional minerals critical for growing our economy, such as iron ore for steel and bauxite for aluminum.” These demands will mean “expanding existing and creating new supply chains,” with the maritime industry needing to “overcome significant logistical challenges if it wants to deliver to market the staggering increase in mineral volumes required.”

Shipyards are “woefully short of capacity” to build the additional tonnage, which will likely be 30 to 50 percent greater by the mid-2030s than its last peak in 2011. Increased maritime trade from energy transition demands would require “building 60-90 percent more annual ship tonnage than the industry can build today.”

The report describes the materials cycle of industry and points out that the current business model considers raw materials “unlimited in supply,” which simply cannot be assumed to be true for the minerals and materials needed for massive wind and solar buildout. It also shows that at any point along the materials cycle, “if the blue arrows… disappear, or in the case of aspirational energy forecasters, are ignored,” there is “the black hole of the energy transition.”

The scale of global shipping needs for a potential energy transition also poses a problem for shipbuilders and shipowners given the International Maritime Organization’s mandates to decarbonize their fuel. The industry is targeting net-zero carbon dioxide emissions by 2050, which means a great deal of uncertainty for shipowners constructing and purchasing new ships— and consequently, placing bets on various fuels and power systems.

Shipbuilding is also dominated in China, South Korea, and Japan, with roughly 95 percent of all new ship tonnage constructed in those countries’ shipyards, and less than one percent coming from the U.S. shipbuilding industry.

The NCEA’s report highlights one more way in which allies and non-U.S. companies can throttle whatever ambitions U.S. policymakers might hold for an energy transition. If the materials for wind turbines and solar panels are mined and refined overseas, it can’t be useful unless a sufficient number of ships exist to economically transport them to the U.S.