Stopford is non-executive president of Clarkson Research Services. Image Credit: Marecon
The shipping industry may be presented with a $3.4 trillion capital expenditure bill for eliminating its carbon emissions over the next 40 years.
Economist Martin Stopford, non-executive president of Clarkson Research Services, presented the estimate at Capital Link's Decarbonisation in Shipping Forum on Thursday.
The estimate includes a total of $2.19 trillion to replace the existing fleet by 2050 and an additional $1.2 trillion for the expansion in the global fleet needed by then. The bill does not include the likely higher cost of zero-carbon fuels compared to conventional bunkers.
"Whichever way it goes, $3.4 trillion is an awful lot of money," Stopford said.
Stopford compared the size of the bill to an average earnings rate across shipping of $15,000/day over the past 30 years.
"Whenever I run this through a return on capital analysis, I get something like a couple of percent over LIBOR," he said.
"In other words, there's barely enough money here to pay for the capital involved during a period when ship technology was very stable, and you couldn't depreciate the ship.
"The big question is, how are you going to finance three, four or five trillion of new investments.
"And it has to start reasonably quickly."