UCL launches ship-level climate risk tool for financiers

Researchers at UCL’s Shipping and Oceans Research Group have developed a new framework to help shipowners, charterers, banks and investors assess which ships are most exposed to climate transition risk. The Climate Resilience Framework is designed to fill a gap left by today’s assessment tools, which largely look backwards at historic emissions, current compliance status or a single snapshot of vessel performance. Instead, the UCL approach tests ships against 384 internally consistent combinations of regulatory, fuel price and technology cost assumptions. The initial work applies the method to more than 2,000 commercial vessels from the Clarksons World Fleet Register, producing a risk score that reflects how each ship may perform across a wide range of plausible futures. A public Research Square summary says the framework evaluates vessel-level transition risk under uncertainty around future regulation, fuel prices and technology costs. “Existing assessments typically rely on a limited set of scenarios and don’t capture the value of flexibility under uncertainty,” said Dr Marie Fricaudet, senior research fellow at UCL Shipping and Oceans Research Group and lead author. “Until now, the industry hasn’t had a consistent way to compare transition risk across individual vessels or portfolios.” The framework builds on stranded-asset analysis but uses real option theory, treating a ship’s ability to adapt through fuel switching, retrofitting or delayed investment as a source of economic value rather than simply a hedge. That distinction matters because not all shipping climate risk looks the same. Inefficient conventional ships with limited retrofit potential face direct regulatory and technology risk. Tankers, LNG carriers, LPG carriers and coal-linked bulk carriers face an additional demand-side risk because they carry the very fossil fuels the wider economy is trying to reduce. UCL’s earlier work found that more than 40% of ships globally transport fossil fuels, and warned that the transition away from fossil fuels could create oversupply risk for fossil fuel-carrying ships. That does not mean all tankers or gas carriers are automatically stranded. The point of the UCL framework is more granular. A modern, efficient tanker with credible retrofit options may prove more resilient than an inefficient container ship with no practical conversion pathway. Segment matters, but vessel age, efficiency, fuel optionality and retrofit readiness matter more. The timing is important. Shipping investment decisions are being made before the regulatory picture is fully settled. The IMO’s greenhouse gas strategy targets net-zero emissions from international shipping by or around 2050, with indicative checkpoints for 2030 and 2040, while the proposed IMO Net Zero Framework would apply to ships above 5,000 gt and combine fuel intensity requirements with pricing mechanisms. UCL’s work suggests conventional ships that cannot be converted rank among the riskiest assets, while retrofit readiness, energy efficiency and technologies such as wind-assisted propulsion improve resilience. Under current IMO policy uncertainty, efficient older tonnage and conventional or LNG dual-fuel vessels can, in some cases, represent lower climate-risk investments because they preserve flexibility. For financiers, the significance is clear. Existing lender frameworks can show where a portfolio stands today, but not how individual ships may cope with future regulation, fuel prices, technology costs or declining demand for fossil cargoes. Michael Parker, former chairman of the Poseidon Principles Association, said banks need tools to identify where transition risk is concentrating across shipping portfolios. Professor Tristan Smith of UCL said the framework is not about predicting winners, but giving shipping “simple, transparent and repeatable” ways to compare risk across asset and design choices. The report suggests climate risk is moving from a sector-level discussion to a ship-by-ship valuation question. The vessels most exposed may not simply be the oldest or dirtiest, but those with the fewest options when regulation, fuel economics and cargo demand move against them. Sam Chambers Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune. Read Next July 2, 2026 Wagenborg and Carisbrooke line up ice-class newbuilds in China July 2, 2026 Seanergy turns to Euronext Athens for fleet expansion July 2, 2026 AP Moller Holding takes over Ocean Yield July 2, 2026 CMA CGM buys FedEx logistics arm in $1.4bn US push July 2, 2026 Tsakos ex