Banks: Vessel Financing Increasingly Based on Energy Efficiency
Banks are beginning to recommend efficiency retrofits to shipowners, and are using energy-efficiency data in deciding which vessels they finance—and which they won’t, says a survey conducted by Carbon War Room.
If this trend continues, efficiency retrofits will offer increasing wealth-creating opportunities and inefficient ships will become more and more unmarketable.
HSH Nordbank, KfW IPEX-Bank, and other banks surveyed by global NGO CWR have indicated that vessel efficiency rankings — such as the A to G GHG emissions rating developed by independent ship vetting company RightShip and CWR — now form an important part of assessing risk and return, with inefficient vessels now representing a higher-risk investment.
Energy efficiency data is also being used in credit-approval processes for vessel purchases, loan assessments for retrofit projects, and re-sell or scrapping decisions, with banks citing efficiency as a key indicator for a vessel’s profitability.
CWR said banks can see the formation of a two-tier market comprising high- and low-efficiency vessels. Eco-efficient vessels demand a premium price at newbuild stage, are more likely to be chartered, maintain asset value over time, and have a longer lifespan, CWR said in a release.
”In view of the beneficial risk profile and environmental benefits, we favour eco-ships over ships with poorer energy efficiency,” Carsten Wiebers, Global Head of Maritime Industries, KfW IPEX-Bank, said.
”We see a clear trend towards a two-tier market of high- and low-efficiency vessels—more energy efficient vessels have an enhanced marketability as well as a higher revenue potential for the ship owner and thus a more favourable risk profile for financiers.”