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MO’s carbon intensity reduction targets to act like an ever-tightening belt around shipping’s waistline – forcing shipowners to either invest in mid-term ‘transitional’ fuels or conventional efficiency designs and technologies. Either way, significant capital is required, with no guarantee of returns or survival.
Short term risk is associated with the existing fleet struggling to stay ahead of carbon efficiency metrics that will increasingly eliminate tonnage and some owners from the market.
That process will spur a mid-term order boom to account for the transitional fleet replacement requirements that cannot be met via retrofits. The most significant mid-term risk for shipowners in this period lies in the longevity of designs; a subject that is already dividing owners. While some of the advanced guard are betting on transitional dual and tri-fuel tonnage options, the majority are assuming conventional fuel eco designs will sustain them ahead of the Annual Efficiency Ratio curve of carbon emissions long enough to avoid investment in gas as a transitional option, and rather heading directly into ammonia or hydrogen designs. That division is already starting to shape the strategic outlook of the transition.
Read more in this white paper.
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