The world’s oil tankers risk losing almost a third of their value should a shift away from fossil fuels gain momentum in the coming decades, a new report has warned. The $16obn tanker market is “most exposed” to a low carbon energy system given that it is dependent on fossil fuels with few alternative cargos available, according to Maritime Strategies International, a shipping industry research group. Pressure on oil and gas companies has ramped up concerns in recent years about so-called “stranded assets” – hydrocarbon reserves that may be left in the ground as they have been rendered uneconomic by measures to tackle climate change.
Attention is now turning to the implications for the corner of the shipping world that facilitates the global trade of oil and other fossil fuels. “Shipowners and people that finance these ships could see their market is sinking,” said Stuart Nicoll, a director at Maritime Strategies. “This just hasn’t had any attention.” Under the most extreme fall in the use of hydrocarbons modelled by Maritime Strategies, total seaborne trade in oil, coal and liquefied natural gas tumbles from a peak of about 5.5bn tonnes in the early 2020s to about 3.7bn tonnes by 2045.
In that scenario, demand for oil tankers falls from 2025, shrinking the fleet by 30 per cent and shaving earnings for a 2m-barrel oil tanker by about a third compared to historic levels. This would also erode the value of the global tanker fleet, with the report predicting a drop from $16obn in 2018 to about $114bn by 2045. The shipping industry has suffered periods of weak demand, but a sustained drop would be unprecedented.
Although the sector has been grappling with its own fuel choices, amid a push to clean up the indust ry, it has not been forced to evaluate the potential effect of measures to tackle climate change on cargo volumes and the value of its vessels. Big owners of oil tankers include New York-listed Frontlin e, Bermuda based DHT Holdings and Belgium headquartered Euronav.