The world’s rapidly growing fleet of ships that can run on liquefied natural gas (LNG) are at risk of financial losses of $850bn by 2030, according to a new study by UCL Energy Institute researchers.
The study, released at the Marine Money conference during New York Climate Week, found that, if policies that incentivise shipping to decarbonise in line with the Paris Agreement were in place by the end of the decade, the LNG-capable fleet would compete against zero emissions shipping, whilst also being incentivised to switch away from the use of fossil fuel.
Whilst policy and competition would affect all ships built to use fossil fuels, the analysis suggests that more expensive LNG-capable assets (also known as LNG dual-fuel) would see reductions in their value to match the value of similar aged but lower cost conventional vessels designed to use fuel oil.
The report found that the write-down of the full $850bn value at risk would not be not realised if LNG-capable vessels were retrofitted to run on scalable zero emission fuels (hydrogen and hydrogen-derived fuels such as ammonia). Under these circumstances, the potential loss is estimated at approximately 15-25% of their value (£113bn-£185bn, if the LNG-capable fleet grows strongly this decade).
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