CONSEQUENCES for shipping markets of a major shift in energy consumption away from hydrocarbons and towards renewables and biofuels is the subject of a report by research and consultancy firm, Maritime Strategies International.
Prepared on behalf of the European Climate Foundation, the report shows that if the Paris Agreement goals are met, the fossil fuel cargo base shipping serves would undergo an aggressive and prolonged transformation.
“Whilst some sectors of the shipping industry, such as containerships, would be virtually unscathed, those for which hydrocarbons comprise a significant proportion of – or all – the cargo mix would undergo decades of falling demand,” MSI director Stuart Nicoll said.
“The results, detailed in the report, would be multi-decade declines in fleet capacity, earnings and asset prices across the affected sectors. Ship owners would be forced to slash new ordering and scrap uneconomic vessels.”
MSI’s shipping market modelling systems enable analysis of how changes in energy demand will affect inter-regional commodity trade flows, and the associated shift in required shipping capacity, industry earnings and asset prices, across all segments of the shipping industry.
The analysis projects two demand frameworks – ‘reduction’ and ‘reference’ – designed to provide broad narrative and structure to long-term global energy demand.
“The energy transition from fossil fuels to renewables means that investors in shipping and ports are exposed to substantial financial risks, which have not been adequately assessed before,” co-author Tim Smith, director, oil and tanker markets at MSI said.
“Vessel selection will be critical, and divestment from sectors with the greatest exposure to fossil fuels may prove the only way to profitably navigate the changing landscape.”