Survey: Banks Prefer Eco Ships

zoom Several leading banks in the shipping industry, including HSH Nordbank and KfW IPEX-Bank, use energy-efficiency data in making investment and financing decisions, according to the NGO Carbon War Room (CWR). HSH Nordbank, KfW IPEX-Bank, and other banks surveyed by 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. 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. The existence of a two-tier market is becoming increasingly evident: 25% of the non-container charter market vet potential vessels for efficiency before charter and recent RightShip data analysis shows that the average lifespan of an A rated vessel is likely to be up to eight years longer than that of a G rated vessel. In addition, in 2014, three ports—Port Metro Vancouver, Port of Prince Rupert, and Port of Barbados—began to use the A to G GHG Emissions Rating to offer financial incentives to the owners of more-efficient vessels entering their ports. KfW IPEX-Bank also revealed last year that efficient container vessels of comparable capacity consume 30% less bunker fuel than inefficient vessels at the same operating profile. This represents a significant cost advantage, particularly if competing vessels are switching to more-expensive distillate fuels in Emission Control Areas. Each individual vessel in the global shipping industry’s 90,000+ fleet represents a multi-million-dollar investment. Ship owners and operators rely on the banking sector to ensure they can build, buy, upgrade, and maintain these assets. This means that leading shipping banks have a huge influence on the way the market moves and develops; each bank must carefully control its market exposure and efficiency is fast becoming a key measure, says CRW. Image: Ecoships