DNV's analysis of fleet strategies in uncertain energy transition introduces a scenario-based framework for assessing transition risks and identifying fuel pathways and technologies that balance costs and risks at the fleet level. This analysis shows that fleet strategies can have very different performances depending on how the energy transition progresses, with significant outcomes in slow and fast transition scenarios.
Updated Framework for Energy Transition Risk Management
This study includes an updated version of DNV's three-phase framework for integrating non-financial qualitative risks with financial modeling. The first phase focuses on defining fleet strategies, including fuel choices, retrofitting, and modifications. The second phase defines scenarios and models regulatory timelines, fuel availability, and prices. The third phase is dedicated to conducting stress tests to evaluate strategies against scenarios in terms of risk and cost.
Case Study: VLCC Fleet for Retrofit
The maritime forecast study up to 2050 applies this framework to the shipowner managing five Very Large Crude Carriers (VLCCs) operating in the spot market with limited exposure to the EU/EEA. This fleet includes conventional ships equipped with scrubber systems without cold ironing capability: two ships built in 2010, one ship in 2015, and two ships in 2020. The fleet's structural retrofit program replaces each ship at the age of 20, starting in 2030.
Defining Strategies
The case study compares two potential fleet strategies from 2026 to 2050. Strategy A involves using high-sulfur heavy fuel oil (HSHFO) and a scrubber system, where the owner continues to order new ships with conventional fuel and open-loop scrubbers. The existing fleet employs basic operational measures such as hull cleaning and air routing without making physical modifications.
Strategy B involves the introduction of dual-fuel ships powered by LNG, designed with advanced energy efficiency. In 2026, three of the newest ships undergo retrofits that include the installation of energy-saving devices and low-friction hull coatings.
Cost Assessment Based on Strategy and Scenario
The cost analysis in this study shows that the gap between the two scenarios in breakeven daily rates is widening until 2049. Cost performance, including capital, operational, fuel, and compliance costs, determines the average breakeven daily rate for each ship. Both strategies start with breakeven rates of approximately $52,000 per day in 2026.
In the slow transition scenario, Strategy A remains the low-cost option, reaching about $61,000 per day by 2049. Strategy B increases to $67,000 per day due to the higher investment costs of dual-fuel LNG ships.
In the fast transition scenario, the economic balance reverses. The breakeven rate for Strategy A rises to about $167,000 per day by 2049, while Strategy B reaches a lower rate of about $144,000 per day.
Risk Analysis and Scoring
The risk analysis, structured as Hazard Identification (HAZID), maps events on a scale of probability and consequence from 1 to 3. In the fast transition scenario, Strategy A faces high-risk events. To mitigate risks such as insufficient access to low-carbon fuels, shipowners can utilize compliance pooling, long-term fuel supply agreements, or transfer compliance responsibilities to charterers.
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