…Global tanker market to lose $100bn by 2050
Chibisi Ohakah, Abuja
Oil and gas use for some vessels may greatly reduce by 2050, as demand for them shrinks due to declining use of fossil fuel. According to analysis by consultancy Maritime Strategies International (MSI), some oil tankers could be headed to the scrapyard early if the world lives up to the ambition of the Paris Agreement.
The Paris Agreement is an agreement within the United Nations Framework Convention on Climate Change, dealing with greenhouse-gas-emissions mitigation, adaptation, and finance, signed in 2016. The largest goals of the Paris Agreement are, to limit a global temperature increase (this century) to 2 degrees Celsius; also to strengthen the ability of developing countries to cope with the impacts of a changing climate; and to aim to peak greenhouse gas emissions as soon as possible.
The MSI study, conducted for the European Climate Foundation, said demand for the vessels is set to shrink a third by 2050, as fossil fuel use declines under a scenario in which global warming is limited to 1.5C. “The implications are pretty bleak,” the author of the study, Stuart Nicoll reportedly told Climate Home News.
The report said further that if finance backs too much shipping capacity, a global shift to cleaner energy “is going to wipe out a large amount of capital”.
MSI said that dry bulk carriers will also be hit by a predicted halving of the seaborne coal trade, but can switch to carrying other commodities such as grain. While there may be some growth opportunities in transporting wood pellets or biofuels, most renewable energy sources do not require fuel supplies.
Investors have been therefore asked to target their money towards the most efficient ships and consider divesting from big carbon carriers. MSI said quoted scientists warned that staying within 1.5C would require an unprecedented shift in political will, finance flows and behaviour. Meanwhile, a study in Nature this month warned that existing fossil fuel infrastructure, if operated in line with past trends, would burn through the 1.5C carbon budget.
MSI also considered a pathway consistent with holding global temperature rise to 2C, the upper limit agreed in Paris. “There clearly are a range of outcomes. The concept of steady, constant growth in cargo, which has kind of been the bedrock of the industry… whatever scenario, they have to accept that is not going to happen,” Nicoll said. The report observed that campaigners have urged banks, pension funds and other major lenders to divest from shipping companies dependent on the trade in fossil fuels.
Share Action, a registered charity that promotes responsible investment, aimimg to improve corporate behaviour on environmental, social and governance issues, in May this year recommended drawing the line at shippers getting 30% of revenue or more from coal, which applies to most listed firms specialising in dry bulk.
“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,” said the campaign group’s Christian Wilson in response to the MSI report.
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