Publication details

Publication date: 23 January 2025

Fricaudet, M., Rehmatulla, N. and Smith, T. (2025), Supply-side and demand-side stranded asset risks in shipping, London, UK.

Summary

A new report from UCL’s Energy Institute Shipping and Oceans Research Group assesses the financial risks to the shipping industry from stranded assets due to stricter GHG regulations in the sector and a global transition to a low-carbon economy. The report 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. All investors must actively address these risks through strategic investment choices, energy efficiency measures, and proactive planning for the IMO’s mid-term measures and wider climate change policies.

The report finds that over 40% of ships globally transport fossil fuels, and nearly all ships are fossil-fuelled. To align with shipping’s fair 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 face oversupply, with 26–32% of fleet value at risk around 2030. 

View the report

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