What is it about?
The advent of new regulations and emission goals has placed an imperative on shipping companies to reduce their emissions. This paper presents an estimation of the financial implications of making vessels "greener." It provides a detailed account of the costs associated with retrofitting existing vessels, constructing new ones, and scrapping older vessels.
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Why is it important?
This paper approximates the short-term cost implications of maritime decarbonization. To this end, a vessel-based model has been developed which distinguishes financial effects caused by vessel newbuilding, retrofit investments, and vessel demolition sales for the years 2021 to 2026. The principal conclusion is that a total of USD 317 billion is required to decarbonize the global fleet by 2026. Of this amount, USD 235 billion is earmarked for the construction of new vessels, while the projected costs of retrofitting are estimated at USD 114 billion. It is estimated that income generated through vessel demolition sales will total approximately USD 33 billion. These figures indicate that, excluding the proceeds from the sale of vessels, an estimated USD 63 billion in capital would be required on an annual basis to construct new ships and renovate existing ones between 2021 and 2026. In accordance with standard loan-to-value ratios, this equates to an annual debt requirement of approximately USD 36 billion to USD 45 billion. The findings are particularly pertinent as they provide a realistic estimation of the industry-wide financial burden and identify potential funding deficiencies, assisting policymakers and industry leaders in determining the viable economic pathways for achieving international environmental targets.
Perspectives
In light of the material presented in this publication, it is imperative to acknowledge the compelling need for both urgency and accountability. The challenge of decarbonizing maritime transportation is inescapable, given the shipping industry's substantial contribution to global CO₂ emissions. This paper offers a more detailed examination of the financial challenges associated with decarbonizing the maritime industry, demonstrating the intricate and costly nature of this undertaking in the future.
Prof. Orestis Schinas
University of Aegean
Read the Original
This page is a summary of: The Short-Term Cost of Greening the Global Fleet, Sustainability, August 2021, MDPI AG,
DOI: 10.3390/su13169439.
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