- The shipping industry’s green transition falters due to an aging fleet fueled by sanctions avoidance and economic incentives.
- Regulatory efforts struggle against the allure of profitable older vessels, while slow adoption of low-carbon fuels and retrofitting costs hinder progress.
- Despite interest in alternatives, the sector faces a prolonged transition, hampered by economic constraints and reduced shipbuilding capacity.
The average age of container ships and tankers has surged to the highest levels in decades, impeding the industry’s transition to eco-friendly models.
Shadow Fleet and Sanctions
The rise of a “shadow fleet,” comprised of older tankers avoiding scrapping, poses environmental risks. Sanctions avoidance, particularly concerning Russian oil, contributes to the reluctance to replace aging vessels.
Regulatory Efforts and Economic Motivations
Efforts by the European Union to ban sales of old tankers to Russia highlight attempts to mitigate environmental risks. However, the strong demand for older tankers, coupled with lucrative economic gains, hinders the industry’s commitment to greener practices.
Alternative Low-Carbon Fuels
While alternatives like ammonia, methanol, and hydrogen gain traction, industry giants are slow to embrace these options. The hesitancy stems from regulatory uncertainties, retrofitting costs, and a lack of enthusiasm for transitioning the entire fleet.
Challenges in Previous Transition Attempts
The shipping industry’s history, such as the promotion of LNG as a bridge fuel, highlights challenges in navigating the transition to greener alternatives. The focus on methane further complicates decisions, casting doubt on the future of LNG.
Economic and Capacity Constraints
Retrofitting existing vessels for a greener era incurs significant costs, making it economically impractical for older ships. Additionally, a 35% drop in shipbuilding capacity over the past 13 years adds a temporal challenge, extending the transition timeline.
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Source: Oil Price
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