Chaucer report finds bigger-than-expected climate change threat to shipping and offshore energy

Extreme weather driven by climate change poses a greater-than-expected threat to the offshore energy and shipping sectors, according to Chaucer, which is calling for industry and the insurance sector to come together to work to understand these risks better. 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. James Brown, head of natural resources at Chaucer, commented: “The whole insurance industry needs to start working with its 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.” The insurer says some offshore facilities may not be designed to sufficiently withstand such environmental challenges. For example, Chaucer highlights wind energy as facing 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 labour, particularly in regions not previously prone to experiencing such disruption,” states Chaucer in the report. It adds that it is vital for manufacturers to evolve their designs to withstand the potential for greater frequency and severity of catastrophic weather events. The shipping industry is also facing more threats from climate change than previously anticipated, says Chaucer, as a result of worsening extreme weather, more winter storms in new areas, coastal erosion, larger waves and sea-level rises. These threats include more frequent severe storms causing blockages and bottlenecks at ports, leading to ships being out at sea longer and greater potential for containers falling overboard from vessels. Sea-level rises could lead to more unnavigable waterways and damage to lower-lying ports like Rotterdam and those in southeast Asia, and increased glacial melt could lead to a heightened risk of ships colliding with icebergs, says Chaucer. The report also highlights the threat to shipping from coastal erosion leading to increased risk of grounding, and ocean salinity changes making ships less stable and needing to be redesigned. Chaucer says tropical cyclones are changing, with increased frequency of severe cyclones, tropical cyclone seasons beginning earlier and likely to degrade more slowly post-landfall, as well as changes to hurricane storm tracks. The insurer calls for better climate modelling. The report states: “The industry needs to ensure it is using the best possible information to make its decisions. This includes academic research and advances, industry knowledge, historical data and existing forward-looking models, new and different data sources, and analysis techniques such as open source.” It adds: “This is crucial not just for (re)insurers with respect to portfolio and exposure management but also for energy customers, especially regarding the design of technologies, tools and processes. While some advances have been made, models need to improve considerably if they are to be a useful tool in helping to manage and mitigate climate change. There is material uncertainty as to how offshore assets, supply chains and business models will react to these identified climate change trends. To combat this, we need to increase the volume, granularity and overall quality of the data we collect.”

Chaucer report finds bigger-than-expected climate change threat to shipping and offshore energy

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