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New Era Of Financing In The Maritime Sector

While the media steers us towards the soap opera of turmoil in governing and geopolitics, in the UK at least, some positive initiatives are flowing into the marine space, writes Charles Haine

This is part of the organised push, under Nusrat Ghani, MP and maritime minister, to emerge from the peloton and bridge the gap to the leading countries now performing as the leading maritime and trade players.

The Clean Maritime Council has been devising a strategy to reduce GHG emissions from the sector and improve air quality in ports, on waterways and shipping lanes. The degradation of air quality alongside the officially-acknowledged climate emergency are key battles of this age. Our sector is on catch-up.

The Government wants to act on shipping but this is subject to loosening the shackles that many governors face when trying to navigate change in the supply chain – mysterious ownership structures, flags of convenience etc. Success will be determined by tangible support and incentivisation of businesses to sell cleaner and greener tech.

The use of hybrid ferries in The Channel, Isle of Wight and Thames is commendable but currently only small-scale. Likewise, shoreside power (i.e. electrification/cold-ironing) is in place in Portsmouth and Scotland but the application is usually military and not yet economical for cargo vessels.

There are some serious mountains to climb to make widespread tech and sector transition to the low carbon economy a reality. Yet, it will be required. Theresa May has forced through a legally-binding carbon zero target by 2050.

The environment is one of the main features of the Maritime 2050 Strategy, which is a long-term look at the opportunities for the sector, including the much talked about zero emissions’ shipping. There will also be a Clean Maritime Plan (July) and a Greening Finance for Maritime initiative launched at London International Shipping Week in September.

The financial sector is being increasingly vocal on these topics. On 2 June, the UK Government’s Green Finance Strategy was launched as was the Green Finance Institute. There are some seriously ambitious intentions in the Strategy which will directly shape so many commercial sectors as they aim to shift £3 trillion into the green economy.

If you’re a listed company or large asset owner you’ll need to disclose on your climate risks and governance in line with Michael Bloomberg’s vanguard initiative – the TCFD recommendations – by 2022. That’s not far away so why not start now? Non-listed companies may need to follow suit soon after.

Amongst the heat of the Saharan Bubble, June also saw 11 major banks launch the Poseidon Principles. Prepared with the input of ship owners, charterers, classification societies and academics, these aim to support the shipping industry by helping achieve the IMO’s stated target of cutting carbon emissions by 50% by mid-Century. The combined global shipping loan portfolio of the banks is worth $100 billion. That’s about 20% of the market.

More banks are sure to join. The Principles establish a way to assess and disclose whether lending portfolios are in line with climate goals. Banks will apply them in all credit products secured by ships that fall under the reach of the IMO.

Their goal is to promote responsible environmental stewardship and socially-responsible behaviours throughout the value chain. So, financial institutions seem to be the ones pushing companies towards emission savings pathways aligned with the Paris Agreement.

The Principles and the shipping sector as a whole is going to need to stay true to Poseidon: the protector of seafarers and the god of the seas, earthquakes and horses.

In his name, the sector needs to make an Olympian effort to help the international shipping industry cut emissions in at least half (of 2008 levels) over the next 30 years.
Source: Port Strategy

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