About
Solutions For Our Climate (SFOC) presents a report on the remarkable decade-long surge in the LNG shipping market, driven by factors such as heightened Asian gas demand and increased U.S. LNG exports. The study emphasizes South Korea's substantial $44.1 billion investment in 652 LNG carrier projects from 2013 to 2023. Noteworthy findings include a shift in LNG carrier ownership towards private equity-linked entities and traditional shipowners. The report flags potential risks of surpassing LNG carrier fleet estimates, posing a threat to global climate targets. Urgent recommendations are provided for stakeholders, urging alignment with a Paris-aligned trajectory to ensure a sustainable energy future.
The past decade marked a 'Golden Age' for LNG, fueled by rising Asian gas demand, surging US LNG exports, and geopolitical shifts in Europe. LNG trading volumes have surpassed traditional pipeline gas, with LNG carrier fleets expanding threefold from 325 units in 2014 to 970 units in 2023.
This report by Solutions For Our Climate (SFOC) reveals the key yet overlooked industries behind this rapid expansion of the LNG shipping market, compared to other more prominent parts of the fossil gas value chain.
Key findings of the research underscore the significant financial contributions from South Korea's public financiers, totaling $44.1 billion across 652 cases in LNG carrier shipbuilding over the past decade (2013-2023).
Notably, this report also emphasizes a pivotal shift in LNG carrier ownership, with private equity-linked entities and traditional shipowners driving shipbuilding orders over the last decade, while energy majors have decreased their involvement.
The findings highlight imminent risks, with LNG carrier fleets on order projected to exceed estimates by the International Energy Agency (IEA), potentially jeopardizing global climate targets. To address these concerns, the report recommends urgent actions to the following stakeholders:
1) Financiers
Public & Private financiers halt financing for new LNG carriers.
Investors to engage LNG shipping players with exclusion criteria for the industry.
2) Shipowners
Stop exposing themselves to the increasingly precarious LNG shipping market.
Align portfolios of vessels to the Paris-aligned trajectory.
3) Shipyards
Korea & China shipyards diversify into the renewable energy sector and accelerate innovative, green-fueled shipbuilding markets.
Failure to realign LNG carrier capacity with the net-zero trajectory poses severe risks to global climate targets, potentially surpassing critical tipping points scientists have warned about. By acting on these recommendations, stakeholders can mitigate these risks and contribute to a more sustainable and resilient energy future.