• UCL and Kuehne Climate Center’s investment risk monitor tool lets investors model fossil fuel carrier oversupply and repurposing scenarios  

• Korea, Japan, Greece, China, and the U.S.-listed firms flagged as most financially exposed to stranded asset risk 

• LNG carrier orders have outpaced future demand across all decarbonization and fossil fuel-reliant energy scenarios 

September 24, 2025 (NEW YORK, SEOUL, LONDON, HAMBURG) - Up to $48 billion invested in LNG carriers is at risk of being written off by 2035 due to projected oversupply under a 1.5°C-aligned climate scenario, according to new research from the UCL Energy Institute and the Kuehne Climate Center (KCC). 

The rising risk stems from a sharp disconnect between LNG carrier orders — that have soared by up to 300% over the past five years — and future demand projections for LNG transport. Strikingly, the research finds that the LNG fleet remains in oversupply throughout the next decade even under scenarios where fossil fuel demand stays high enough to trigger 4°C of global warming, revealing that the recent surge in tanker orders has overshot demand in virtually every energy future. 

The findings are available through the newly launched Investment Risk Monitor for Fossil Fuel Carrying Ships, an interactive online tool that maps out projected supply-demand trends for fossil fuel tankers under a range of climate and energy scenarios, offering a fleet-wide snapshot of future risks. The tool was unveiled during New York Climate Week in a session co-hosted by Solutions for Our Climate (SFOC). 

“The tool and our analysis identify and unlock ways to understand climate-related risks that is often overlooked, and, importantly, shows how shipping assets are likely to face significant financial risk from the global energy transition even under more modest climate change scenarios,” said Dr. Vishnu Prakash, Managing Director of Alethiarc, who spearheaded the work. 

The $48 billion figure marks a dramatic leap from the currently estimated $10.8 billion in stranded LNG shipping assets, based on SFOC’s recent analysis using the latest methodology assessing the industry’s financial risks.  

Two supply scenarios modeled 

The tool simulates two fossil fuel-carrying fleet trajectories: 

• No further ordering: Only ships ordered before 2024 are completed. 

• Newbuilds through 2030: Construction continues at the past annual average rate. 

In both cases, the stranded value is estimated by the number of unemployed or underutilized vessels, assuming they operate until average scrapping age. 

Using the tool, users can simulate repurposing scenarios (e.g., converting LPG tankers to ammonia carriers or product tankers to chemical tankers) to explore cargo flexibility as a risk mitigation strategy. While the demands for transporting coal, crude oil, oil products, and LPG are also set to decline in a climate-aligned future, these fleets face less risk because many vessels are older and easier to redirect. LNG carriers stand out as highly vulnerable: young, expensive, and purpose-built, they would require costly conversions to handle other cargoes, leaving them less competitive and profitable. In short, even repurposing LNG carriers diminishes fleet value due to high conversion costs and intensified competition with newer vessels. 

“For the first time, when estimating of the value at risk, we have included the possibility for certain ship types to be repurposed to carry alternative cargoes.  This allows the users to measure the advantage of cargo optionality when it comes to stranded assets,” said Dr. Marie Fricaudet, Senior Research Fellow at UCL Energy Institute. 

Exposure concentrated in key countries and public markets  

According to the tool, 75% of all fossil fuel-carrying vessel value is concentrated on corporate balance sheets in just 10 countries, with Japan, South Korea, Greece, and China among the most financially exposed. In the U.S., the New York Stock Exchange holds about 12.5% of the total fleet value, or $42 billion, making U.S.-listed companies directly exposed to significant financial risk.

“The shipping sector has a profound transformation ahead of itself. With the Investment Risk Monitor we want to give owners and investors access to information that can help them making good decisions for their current and future investments,” said Stefanie Sohm of Kuehne Climate Center. 

“Anyone active or contemplating becoming active in the financing of these types of vessels is well advised to study and use this tool to the max. It will help financiers to map and avoid stranded assets while also improving their conversation with regulators,” added Maarten Biermans, Partner at Prow Capital. 

In South Korea, which holds the lion’s share of the global LNG shipbuilding market, the implications are especially urgent. Korean shipbuilders — backed by significant public financing — are being encouraged to reevaluate their LNG-heavy order books and explore a strategic pivot toward green shipping. 

“The Investment Risk Monitor provides important data. Korea dominates over 70% of the global LNG shipbuilding market with significant public funding support. With LNG shipping freight falling below break-even levels, we’ve been working with policymakers to help them factor in these risks when making investment decisions,” said Rachel Eunbi Shin from SFOC.  

SFOC is also leading efforts to translate the tool into Korean, helping shipbuilders, financiers, and policymakers access and apply the tool’s insights in a local context. 

ENDS.  

Solutions for Our Climate (SFOC) is an independent nonprofit organization that works to accelerate global greenhouse gas emissions reduction and energy transition. SFOC leverages research, litigation, community organizing, and strategic communications to deliver practical climate solutions and build movements for change.       

For media inquiries, please reach out to Antonette Tagnipez, Communications Officer, at antonette.tagnipez@forourclimate.org.