Climate risk in shipping under the IMO Net Zero Framework: the role of optionality and uncertainty

Climate risk in shipping under the IMO Net Zero Framework: the role of optionality and uncertainty | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Article Climate risk in shipping under the IMO Net Zero Framework: the role of optionality and uncertainty Marie Fricaudet, Tristan Smith, Nishatabbas Rehmatulla This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9247082/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted You are reading this latest preprint version Abstract Climate transition risk in shipping arises from the interaction between long-lived assets and deep uncertainty over future regulation, fuel prices, and technology costs. Existing assessments typically rely on a limited set of scenarios and do not capture the value of flexibility under uncertainty. Here we develop a ship-level framework to evaluate transition risk across a large ensemble of plausible futures reflecting regulatory, technological, and market uncertainty surrounding the International Maritime Organization’s proposed Net Zero Framework. Applying this approach to a sample of commercial vessels, we find that transition risk is substantial and highly heterogeneous within and across segments. Contrary to prevailing expectations, early commitment to alternative fuel technologies does not consistently reduce downside risk under current policy uncertainty. Instead, the ability to delay investment and preserve retrofit options emerges as a key determinant of resilience. Our results highlight the importance of regulatory clarity for aligning private investment with climate objectives and provide a practical tool for decision-making under uncertainty. Earth and environmental sciences/Environmental social sciences/Climate-change mitigation Scientific community and society/Energy and society/Energy policy Full Text Additional Declarations There is NO Competing Interest. Supplementary Files supplementarymaterialsv1.docx Climate risk in shipping under the IMO Net Zero Framework: the role of optionality and uncertainty Cite Share Download PDF Status: Under Review Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9247082","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Article","associatedPublications":[],"authors":[{"id":616787433,"identity":"eca6211b-640e-4783-9221-da2b5f505c0e","order_by":0,"name":"Marie Fricaudet","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA4ElEQVRIiWNgGAWjYFACxgcMCSD6AIjFYAERa8CrhdkAqoUZyGKQIFILA0QLmwRRWnQbmNk+PKixS+w73n+smqdGgoG//QCb5Aw8WsyA7pmRcCw5ceaZw2y3eY5JMEicSWCT3IBXC/9hhsQG5sQNN5LZbvM2AB12g4FN8gEBW4Ba6hM33H/MVgzSIk+klsNAW5jZmEFaDEBa8DrsMFBLwrHjxjPPJBtLzjkmwWN4JrHZEq/3jzczM/6oqZbtO37w4Yc3NTZycscPH7zZg0cLAzMan4dgRI6CUTAKRsEoIAwA3+dJDRPwCXQAAAAASUVORK5CYII=","orcid":"https://orcid.org/0000-0001-6836-5952","institution":"UCL","correspondingAuthor":true,"prefix":"","firstName":"Marie","middleName":"","lastName":"Fricaudet","suffix":""},{"id":616787434,"identity":"56ee22f6-edb9-4d89-9e08-74bcba58ab78","order_by":1,"name":"Tristan Smith","email":"","orcid":"","institution":"University College London","correspondingAuthor":false,"prefix":"","firstName":"Tristan","middleName":"","lastName":"Smith","suffix":""},{"id":616787435,"identity":"30548e42-850a-47d2-b260-fe483ca464d7","order_by":2,"name":"Nishatabbas Rehmatulla","email":"","orcid":"","institution":"UCL Energy Institute","correspondingAuthor":false,"prefix":"","firstName":"Nishatabbas","middleName":"","lastName":"Rehmatulla","suffix":""}],"badges":[],"createdAt":"2026-03-27 16:55:49","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-9247082/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9247082/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":109297844,"identity":"b764af46-0620-4e81-a5d0-848f0d1080a1","added_by":"auto","created_at":"2026-05-15 09:06:42","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":2011537,"visible":true,"origin":"","legend":"","description":"","filename":"crmmanuscriptNSv1.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9247082/v1_covered_e5083c46-2484-422d-b9c0-8d86512de7b5.pdf"},{"id":109245925,"identity":"c627ba26-7a70-4403-9f0e-4fb52a095494","added_by":"auto","created_at":"2026-05-14 08:07:12","extension":"docx","order_by":1,"title":"","display":"","copyAsset":false,"role":"supplement","size":38604,"visible":true,"origin":"","legend":"Climate risk in shipping under the IMO Net Zero Framework: the role of optionality and uncertainty","description":"","filename":"supplementarymaterialsv1.docx","url":"https://assets-eu.researchsquare.com/files/rs-9247082/v1/2a9eff2772f03ac3deee9f32.docx"}],"financialInterests":"There is \u003cb\u003eNO\u003c/b\u003e Competing Interest.","formattedTitle":"Climate risk in shipping under the IMO Net Zero Framework: the role of optionality and uncertainty","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"nature-portfolio","isNatureJournal":true,"hasQc":false,"allowDirectSubmit":false,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"","title":"Nature Portfolio","twitterHandle":"","acdcEnabled":false,"dfaEnabled":false,"editorialSystem":"ejp","reportingPortfolio":"","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"","lastPublishedDoi":"10.21203/rs.3.rs-9247082/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-9247082/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eClimate transition risk in shipping arises from the interaction between long-lived assets and deep uncertainty over future regulation, fuel prices, and technology costs. 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