- Rystad Energy’s report reveals significant challenges for tanker and gas carrier owners in meeting climate targets.
- The report indicates that limiting global warming to 1.5°C is unlikely, with a more realistic focus on scenarios of 1.9°C and 2.2°C.
- Rapid advancements in renewable energy technology and declining costs may reshape energy demand by 2040.
- Ongoing increases in hydrocarbon production raise concerns for the future viability of new vessels being ordered.
Rystad Energy presents a stark outlook for many stakeholders, especially tanker and gas carrier owners, given the world’s aim to limit temperature rise to the 1.5°C target. In its Global Energy Scenarios 2024 analysis, the Oslo-based consultancy indicates that the global energy transition is accelerating. While the goal of keeping global warming well below 2°C by mid-century remains an enormous challenge, Rystad believes it is still attainable, reports Seatrade Maritime.
Declining Costs of Renewable Energy
The report underscores a significant decline in the costs of solar, wind, and battery technologies, which are decreasing at an unprecedented rate. Rystad noted a remarkable surge in solar installations in 2023, which saw a 60% increase in capacity, bringing the total to 360 gigawatt-hours of alternating current.
Impact of Temperature Reduction Scenarios on Energy Demand
Rystad’s analysis includes three temperature reduction scenarios, with a 1.6°C decrease posing the greatest challenges. In this scenario, demand for oil, natural gas, and coal is projected to drop sharply later this decade, potentially reaching about half of current levels by 2040, with coal experiencing an even steeper decline.
Concerns for Shipowners in a Changing Market
This scenario raises serious concerns for shipowners, especially those operating tankers and LNG carriers, who have been investing heavily in new vessels. Many of the hundreds of ships currently on order may not be delivered until 2027 or 2028, and by 2040, these vessels would be only halfway through their operational lives.
Alternative Scenarios and Ongoing Hydrocarbon Production
Rystad also explores two additional scenarios that aim to limit warming to 1.9°C and 2.2°C. While these alternatives are less alarming from a shipping perspective, they still pose significant implications for those involved in maritime energy transport. Many experts contend that achieving the 1.6°C target is highly improbable, as oil producers continue to increase output, with new sources being developed regularly.
Recent developments indicate a resurgence in hydrocarbon production, including a potential easing of voluntary crude output limits by OPEC+, expected to commence at the end of November, an uptick in crude production and exports from Canada following the activation of the Trans Mountain pipeline, and pledges from certain U.S. presidential candidates to boost hydrocarbon energy production in the years ahead.
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Source: Seatrade Maritime
