Demand for oil tankers will shrink by one-third by 2050 if countries stay on track to hold average global warming to 1.5°C, meaning that some existing ships may ultimately become stranded assets, according to an analysis released last week by consultants at Maritime Strategies International (MSI) for the European Climate Foundation.
The findings are stark enough to shape investment decisions that financiers are making today, Climate Home News reports.
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“The implications are pretty bleak,” said study author Stuart Nicoll, adding that the shift off fossil fuels “is going to wipe out a large amount of capital” if investors sink too much money in shipping capacity.
The prospects aren’t quite as dire for dry bulk carriers that could see a 50% drop in coal shipments by sea, “but can switch to carrying other commodities such as grain,” Climate Home notes. “While there may be some growth opportunities in transporting wood pellets or biofuels, most renewable energy sources do not require fuel supplies.”
“Due to the long operational life of ships, the low-carbon transition poses a very real threat to shipping companies reliant on fossil fuel transportation,” added Christian Wilson, senior research officer at Share Action, which is urging banks, pension funds, and other investors to step away from shippers that derive 30% or more of their revenue from coal. The report advises investors to direct their dollars to the most efficient ships and think about divesting from big carbon carriers.
Last month, 11 major banks “signed up to the Poseidon Principles, which set standards for the climate performance of shipping fleets,” Climate Home states. “The framework does not address the environmental or financial risks associated with the carbon content of their cargo, however.”
But the Global Maritime Forum recognizes that the post-carbon transition will “inevitably impact” the industry, said Managing Director Johannah Christensen. “Sober assessments of the implications of this energy transition on shipping are tremendously important to industry leaders and investors making long-term strategic investment decisions,” she told Climate Home.