The Paris climate summit in December 2015 adopted the goal of limiting global temperature increase to “well below” 2 degrees Celsius, but preferably to 1.5 degrees Celsius compared with pre-industrial times. In 2018, The UN Intergovernmental Panel on Climate Change (IPCC) presented a report showing that limiting temperature increase to 2 degrees is insufficient, and that the difference compared to an increase of 1.5 degrees has serious consequences for ecosystems, humans, stability, costs and society.
The International Maritime Organization (IMO), a UN body, gathered in 2018 behind a clear goal of reducing emissions from ships and thus the impact of international shipping on global warming. The overall goal is zero greenhouse gas (GHG) emissions from shipping as soon as possible within this century. By 2050, the goal is at least 50% reduction in total GHG emissions compared to 2008.
Today there are no alternative fuels for deep-sea shipping that could help achieve the IMO goals, and there is no time to wait for the perfect solution. Flexible solutions are required so that newbuildings can be modified to use alternative fuels and benefit from other future technological innovations without excessive costs and barriers.
Ships to be built in the next few years are expected to have a lifespan well past 2030 – and for some even beyond 2050, depending on technology and fuel choices.
This pilot investigates the emission limits that shipping must implement to meet the 2 (and preferably 1.5) degree target. The pilot will further develop a model for conducting financial risk assessment of newbuildings based on assumptions of future climate policy, technologies, fuel and other climate-related developments in international shipping.
The model will be tested through various case studies, with a focus on investors, lenders, cargo owners and shipping companies.
The goal is that “robust” future-looking analyses can give the financial industry the opportunity to influence financial flows in a climate-positive direction, reduce climate risk, and help shipowners to finance ships that meet future requirements and opportunities.
Status: The pilot was launched in December 2019. A first version of the model has been developed to carry out financial risk assessment. Efforts are also being made to obtain and structure the necessary input data. The preliminary case modelling has been carried out for large tankers. The plan is to also include case studies for other ship types.