The global offshore energy and shipping industries are facing a greater-than-expected threat from climate change as extreme weather becomes more frequent, according to a new report from Chaucer.
In the report, Oceanographic climate change: The impact of ocean-based climate change trends, Chaucer warned that the offshore energy sector – especially assets like oil platforms and wind turbine installations – is headed for a “material change” in risk exposure from worsening extreme weather patterns. Chaucer warned that some offshore facilities may not be designed to withstand these challenges and called for industry and the insurance sector to work together on better understanding the risks.
The report said that wind energy faces a particularly severe threat from climate change as the offshore sector continues to grow rapidly, stretching past historical territorial boundaries. In addition to causing damage, extreme weather can also restrict assets to sites in the wake of an event, delaying or hindering repairs, increasing costs and making it difficult to access skilled labor. Chaucer said that manufacturers must evolve their designs to withstand the potential for more frequent and severe catastrophic weather.
The report also warned that the shipping industry is facing more threats from climate change than previously predicted. These threats include:
- More frequent and severe storms causing blockages and bottlenecks at ports, forcing ships to be at sea longer. A greater number of severe storms could also lead to more containers falling overboard
- Rising sea levels leading to more unnavigable waterways and damage to lower-lying ports
- Coastal erosion leading to increased risk of grounding
- Increased glacial melt leading to increased risk of ships colliding with icebergs
- Ocean salinity making ships less stable and needing to be redesigned
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Oceanographic climate change could also force the development of new shipping routes, Chaucer said. For example, the Northwest Passage above North America could become a viable route. Canada and the Great Lakes could also see greater use as routes into North America, while the cruise industry could expand its footprint across the poles, Chaucer said.
“The whole insurance industry needs to start working with their customers to adapt to climate change and to support increased resilience of their infrastructure, facilities and supply chains,” said James Brown, head of natural resources at Chaucer. “Insurers have the opportunity to drive tangible change with marine and energy customers, brokers, regulators and governments. Collective action is imperative to ensure we manage these risks, mitigate against future impacts and create new solutions for emerging opportunities in a rapidly changing market.”