The global offshore energy and shipping sectors are under a greater than expected threat from climate change as extreme weather becomes more commonplace warns Chaucer, the specialty reinsurance group.
In a new report, ‘Oceanographic climate change: The impact of ocean-based climate change trends’, Chaucer warns that the offshore energy sector – particularly assets such as oil platforms and wind turbine installations – is on course for a material change in risk exposure from worsening extreme weather conditions including changes in storm patterns. Chaucer cautions that some offshore facilities may not be designed to sufficiently withstand such environmental challenges and are calling for industry and the insurance sector to come together to work to understand these risks better.
Chaucer adds that wind energy faces a particularly acute threat from climate change as the offshore sector continues its rapid growth, stretching beyond historical territorial boundaries. In addition to causing unforeseen damage, extreme weather and tropical storms can also restrict access to sites after the event, hindering maintenance and repairs, increasing costs, and making it hard to source skilled labor, particularly in regions not previously prone to experiencing such disruption. Chaucer says it is vital for manufacturers to evolve their designs to withstand the potential for greater frequency and severity of catastrophic weather events.
Chaucer also warns that the shipping industry is facing more threats from climate change than previously anticipated, including more severe storms, sea level rises and coastal erosion. This includes:
- More frequent severe storms causing blockages and bottlenecks at ports, leading to ships being out at sea longer. A greater number of severe storms could also lead to more containers falling overboard from vessels
- Sea-level rises leading to more unnavigable waterways and damage to lower-lying ports like Rotterdam and those in South East Asia
- Coastal erosion leading to increased risk of grounding
- Increased glacial melt leading to a heightened risk of ships colliding with icebergs
- Ocean salinity changes making ships less stable and needing to be redesigned.
Chaucer explains that oceanographic climate change could also see new shipping routes develop. For example, the Northwest Passage above North America could become a viable commercial route. Canada and the Great Lakes could see greater use as routes into North America, while the cruise industry could also expand its footprint across the poles.
James Brown, Head of Natural Resources at Chaucer, says:
“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. 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.”