Fricaudet, Marie;
Sohm, Stefanie;
Smith, Tristan;
Rehmatulla, Nishatabbas;
(2024)
Fossil Fuel Carriers and the Risk of Stranded Assets.
Elsevier: New York, NY, USA.
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Abstract
More than a third of the global shipping capacity is dedicated to transporting fossil fuels. As the world will have to drastically reduce the use of fossil fuels to stay within the 1.5°C climate targets of the Paris Agreement, much of this fleet value is at risk of being stranded. We build a top-down quantitative assessment of the risk of asset stranding for fossil fuel carriers and show that both oil tankers and liquefied gas tankers would be in significant oversupply in the late 2020s to 2040 even if no new ships are ordered after 2023. Continued newbuilding would lead to up to 41% of expected earnings from 2024 to 2050 failing to materialise, putting large amount of the fleets at risk of devaluation. The results have implications for investors in fossil fuel carriers today and contribute to the burgeoning literature on stranded assets by providing a first assessment of the risk of asset stranding for assets dedicated to transporting fossil fuels.
| Type: | Working / discussion paper |
|---|---|
| Title: | Fossil Fuel Carriers and the Risk of Stranded Assets |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.2139/ssrn.4788592 |
| Publisher version: | http://dx.doi.org/10.2139/ssrn.4788592 |
| Language: | English |
| Additional information: | This version is the version of record. For information on re-use, please refer to the publisher's terms and conditions. |
| Keywords: | stranded assets, Shipping, Energy Transition, transition risk, demand-side risk, Fossil Fuels |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Bartlett School Env, Energy and Resources |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10191203 |
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