TY - JOUR

T1 - The Short-Term Cost of Greening the Global Fleet

AU - Schinas, Orestis

AU - Bergmann, Niklas

N1 - 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.

PY - 2021/8

Y1 - 2021/8

N2 - 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.

AB - 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.

KW - Management studies

KW - sustainable finance

KW - green logistics

KW - shipping

KW - decarbonization

KW - ship finance

KW - retrofit

KW - green shipping

KW - cost of compliance

UR - http://www.scopus.com/inward/record.url?scp=85113705743&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/82e63940-4a37-3901-b806-23a0cb31e829/

U2 - 10.3390/su13169439

DO - 10.3390/su13169439

M3 - Journal articles

VL - 13

JO - Sustainability

JF - Sustainability

SN - 2071-1050

IS - 16

M1 - 9439

ER -