Shipping lenders and investors risk repeating the mistakes made by Europe's electricity utilities and their financiers a decade ago, and the financial fallout could reach far beyond individual shipowners to lenders, investors,
Shipping lenders and investors risk repeating the mistakes made by Europe's electricity utilities and their financiers a decade ago, and the financial fallout could reach far beyond individual shipowners to lenders, investors, cargo owners and other supply-chain stakeholders, says UCL.
The report, Lessons from electricity sector transitions and historic shipping collapses for understanding shipping stranded asset risks, by UCL Energy Institute's Shipping and Oceans Research Group and Strider Carbon examines how stranded assets actually materialized during the renewable energy transitions in Germany and the UK, and how the resulting losses spread from asset owners to banks, retail investors and other stakeholders. It combines this with analysis of two shipping-sector precedents — the collapse of Germany's KG shipping fund model and the bankruptcy of Hanjin Shipping — to draw out what could happen as shipping decarbonizes.
Previous UCL research has estimated that as much as a third of the value of the current and ordered global fleet is at risk of stranding under a 1.5°C-aligned transition. This new report goes further, tracing how that could play out unless actions are taken now to mitigate the risk — and who ends up bearing the losses.
Dr Marie Fricaudet, Senior Research Fellow at
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