Ships on the brink as $400B fleet faces climate shakeup

In the UK, according to a University College London Energy Institute report, over one-third of the global shipping fleet, valued at $400 billion, faces stranding or premature scrapping unless it transitions to zero-emission technology. The study, funded by Oceankind and the Kühne Foundation, warns that tightening climate policies could make many fossil-fuel-reliant vessels unprofitable.

Ships become stranded assets when they can no longer operate economically. Stricter IMO emissions rules and carbon pricing will make fossil-fueled ships more costly to run, while falling demand for coal, oil, and gas will leave many fuel carriers without cargo. The existing and ordered fleet is projected to emit twice the carbon budget allocated to shipping under a 1.5°C trajectory, with liquefied gas tankers particularly vulnerable—26–32% of their fleet value could be stranded by 2030.

While retrofitting ships for ammonia or methanol is an option, high costs, technical limits, and uncertain fuel availability mean it may not be enough to prevent assets from becoming obsolete. New builds, though still exposed to fuel uncertainty, offer better efficiency, longer operational lifespans, and stronger investment security. The report urges shipowners and financiers to account for these risks when making decisions. “Anticipating an ambitious outcome on these and following the latest available science is the least risky strategy,” the authors state.

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