The Marine Environment Protection Committee (MEPC) under the International Maritime Organization (IMO) has established mid-term reduction targets for greenhouse gas emissions from ships and created a pricing structure where shipowners bear the cost of exceeding these emissions. Korea Investment & Securities noted on the 14th that demand for replacing aging vessels is expected to continue steadily, maintaining an 'overweight' investment opinion on the shipbuilding sector.
According to Kang Kyung-tae, a researcher at Korea Investment & Securities, greenhouse gas fuel intensity and segment-specific reduction targets were established during the 83rd MEPC meeting held from the 7th to the 11th. The baseline reduction target for 2028 is set at 4% compared to the 2008 greenhouse gas fuel intensity, with a direct reduction target of 17%.
If the greenhouse gas fuel intensity of a vessel exceeds this baseline, it must purchase credits (RU) accordingly. For instance, if both the direct compliance reduction target and the baseline reduction target are not met, the shipowner must purchase Tier 1 credits at $100 per ton and Tier 2 credits at $380 per ton to meet the baseline. In simple terms, this means they could bear up to $480 per ton.
Researcher Kang evaluated that there is now a strong incentive to replace aging ships. Kang said, "Of course, there may be skepticism about whether to necessarily comply with agreements passed at multilateral treaty organizations, and there may be expectations for pathways to circumvent them," adding, "However, it should be emphasized that the demand for container ships and the technological advancements in vessels are all aligned with environmental sustainability."
Researcher Kang stated, "If the timing for replacing aging vessels shortens, it will benefit all supply chains participating in shipyards, equipment manufacturers, and maintenance markets," adding, "The order cycle for the shipbuilding industry will likely extend in the long term."