Following an opening presentation themed ‘A bank’s view on financing zero-carbon shipping projects’ by ING Bank director, sector coverage, transport and logistics, Jens Van Yperzeele, discussions broadened to feature comment from a panel comprising Lloyd’s Register regional maritime commercial markets manager Taylor Wamberg, ING Bank managing director, head of transport and logistics APAC Gerbrand Vroegop, Methanol Institute chief operating officer Chris Chatterton, Swire Bulk Pte Ltd general manager of sustainability and decarbonisation Susana Germino, and Rio Tinto head of commercial operations Laure Baratgin. The conversation was moderated by Riviera Maritime Media’s executive editor, Edwin Lampert, and conducted under The Chatham House Rule.
It was no surprise, given the setting, that financing the energy shift was a prominent theme. There was recognition that the Poseidon Principles, which integrate climate considerations into lending decisions, marked an important step. At the same time, concerns were expressed that metrics like the high-profile Annual Efficiency Ratio promoted by regulators have very real limitations that can result in an efficient, well-run ship getting a poor efficiency grade. The shared hope was regulators will maintain realistic dialogue with financiers amid the uncertainty ahead.
A recurrent theme was the need for partnering across the industry to balance out knowledge gaps. Banks, for example, are striving to rapidly educate themselves on decarbonisation but cannot rely exclusively on inhouse shipping expertise to navigate the tremendous technology transformation taking place. The required expertise can only be met through industry alliance.
The panel agreed robust data and standards for evaluating real-world emissions are still lacking, and pragmatic carbon pricing mechanisms are necessary to maintain affordable shipping services for society. The need for better alignment of incentives across the maritime value chain and harmonised sustainability regulations was also stressed. “We still collectively know very little,” admitted one participant. “We do our own internal climate analytics but also realise the limitations.”
It was agreed charterers must be at the heart of maritime decarbonisation, as they dictate routeing and speed optimisation choices that influence emissions. Charterers may also have more flexibility around the fuel premiums passed to customers based on cargo type. For example, container lines shipping high-value consumer goods (versus say dry bulk carriers moving commodities like grain and operating on lower profit margins) may have more room to absorb additional fuel premiums without significantly affecting their overall profitability. This reality, said the panel, calls out for a better alignment of incentives across the entire maritime value chain. There was also concern that disjointed and fragmented sustainability regulations could emerge across jurisdictions. Having to continually change operational rules from market to market adds huge complexity for global industries like shipping. To avoid such pitfalls, regulators must co-ordinate efforts and ensure frameworks are harmonised.
