A rapid transition could lead to premature scrapping of over a third of the global fleet, valued at over $400 billion, unless the vessels undergo costly retrofits to remain competitive, according to
A rapid transition could lead to premature scrapping of over a third of the global fleet, valued at over $400 billion, unless the vessels undergo costly retrofits to remain competitive, according to a new report from UCL's Energy Institute Shipping and Oceans Research Group.
The report assesses the financial risks to the shipping industry from stranded assets due to stricter GHG regulations, due for adoption at IMO this year, in combination with the ongoing global transition to a low-carbon energy system. It finds the shipping sector faces substantial supply-side risks linked to carbon intensive vessels becoming obsolete and demand-side risks linked to decreased fossil fuel demand.
The report finds that over 40% of ships globally transport fossil fuels, and nearly all ships are fossil-fuelled. To align with shipping’s estimated share of the carbon budget of 9.6 giga tonnes, ships representing over one third of the existing and ordered fleet value would need to quickly transition to zero-emission technologies or face premature scrapping.
The transition away from fossil-fuels in the wider economy creates further risks of oversupply for fossil fuel carrying ships. In particular, liquefied gas tankers look likely to face the highest exposure to this risk, with 26–32% of fleet
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