The Short-Term Cost of Greening the Global Fleet

Orestis Schinas; Niklas Bergmann

doi:10.3390/su13169439

The Short-Term Cost of Greening the Global Fleet

Orestis Schinas^*
, Niklas Bergmann

^*Corresponding author for this work

Hamburg School of Business Administration

Research output: Journal contributions › Journal articles › Research › peer-review

12 Citations (Scopus)

Abstract

Decarbonizing maritime transport is among the top priorities of regulators and continuously attracts significant research attention. However, the cost of renewing and greening the fleet has not been explored in detail. To address this gap, the paper provided a bottom-to-top estimation of the financial need associated with decarbonizing the global shipping fleet for the next 5 years, i.e., until 2026. By developing a model focusing on the main asset classes, the paper approximated the expenditure implied in the short-term fleet renewal (newbuilding and vessel demolition) as well as the expenditure linked to retrofitting the existing fleet. The results indicated an aggregate financial need of USD 317 billion until 2026. Thereof, USD 235 billion are associated with building new ships, while USD 114 billion are allocated to retrofitting. Furthermore, proceeds of USD 33 billion can be generated via demolition sales of old tonnage, reducing the total financial burden. The results entail important policy implications, as they document the monetary impact on investors, lenders, and shipping companies regarding distinct segments of the fleet. Considering the declining overall supply of capital towards shipping, the given results provide a transparent account of the absolute financial implications of decarbonization policies.

Original language	English
Article number	9439
Journal	Sustainability
Volume	13
Issue number	16
Number of pages	31
ISSN	2071-1050
DOIs	https://doi.org/10.3390/su13169439
Publication status	Published - 08.2021
Externally published	Yes

Bibliographical note

Funding Information:
Author Contributions: Conceptualization, O.S.; methodology, O.S.; formal analysis, N.B.; investigation, N.B.; resources, O.S.; data curation, N.B.; writing—original draft preparation, N.B.; supervision, O.S.; funding acquisition, O.S. Both authors have read and agreed to the published version of the manuscript Funding: This research was funded by SKILLSEA project, grant number Erasmus+ programme, 2018–3387/001-001, project number 601186, as well as funded by the Interreg North Sea Europe programme of the European Regional Development Fund (ERDF), grant 38-2-6-19 WASP.

Publisher Copyright:
© 2021 by the authors. Licensee MDPI, Basel, Switzerland.

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 7 Affordable and Clean Energy

Research areas and keywords

Management studies
sustainable finance
green logistics
shipping
decarbonization
ship finance
retrofit
green shipping
cost of compliance

ASJC Scopus Subject Areas

Computer Science (miscellaneous)
Hardware and Architecture
Energy Engineering and Power Technology
Computer Networks and Communications
Environmental Science (miscellaneous)
Geography, Planning and Development
Renewable Energy, Sustainability and the Environment
Management, Monitoring, Policy and Law

Access to Document

10.3390/su13169439Licence: CC BY

Cite this

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title = "The Short-Term Cost of Greening the Global Fleet",

abstract = "Decarbonizing maritime transport is among the top priorities of regulators and continuously attracts significant research attention. However, the cost of renewing and greening the fleet has not been explored in detail. To address this gap, the paper provided a bottom-to-top estimation of the financial need associated with decarbonizing the global shipping fleet for the next 5 years, i.e., until 2026. By developing a model focusing on the main asset classes, the paper approximated the expenditure implied in the short-term fleet renewal (newbuilding and vessel demolition) as well as the expenditure linked to retrofitting the existing fleet. The results indicated an aggregate financial need of USD 317 billion until 2026. Thereof, USD 235 billion are associated with building new ships, while USD 114 billion are allocated to retrofitting. Furthermore, proceeds of USD 33 billion can be generated via demolition sales of old tonnage, reducing the total financial burden. The results entail important policy implications, as they document the monetary impact on investors, lenders, and shipping companies regarding distinct segments of the fleet. Considering the declining overall supply of capital towards shipping, the given results provide a transparent account of the absolute financial implications of decarbonization policies.",

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The Short-Term Cost of Greening the Global Fleet

Abstract

Bibliographical note

UN SDGs

Research areas and keywords

ASJC Scopus Subject Areas

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