GREEN4SEA Conference & Awards

5 Apr 2017
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GREEN4SEA Conference & Awards

5 Apr 2017
Learn More

Banks to explore decarbonisation challenges for ship financing

banks

Carbon Pricing Leadership Coalition and Carbon War Room called for shipping’s financial institutions to begin analysing and managing the risks created by the shipping industry’s imminent decarbonisation, during a global Maritime Forum roundtable in London.

With the launch of the report ‘Preparing shipping banks for climate change: How can internal carbon pricing help ship-financing banks in risk management?’, the two organisations suggested that the industry unites around a global standard for maritime-specific climate risk assessments.

The report highlights the drivers of decarbonisation of shipping markets. The drivers include the International Maritime Organization’s (IMO) plans to adopt regulations for reducing emissions from shipping and the possibility of shipping being brought into the EU’s Emissions Trading Scheme (ETS), both from 2023, and science-based targets initiatives that could also apply pressure from outside the maritime sector to reduce emissions. The report also emphasizes the role that the Paris Agreement could play in depressing demand for the transport of key commodities like petroleum products and coal.

Moreover, the report suggests that the shipping industry begin to consider methods, such as internal carbon pricing or other shipping industry-appropriate tools, to analyse the potential climate-exposed finance that is part of the existing $355.25 billion global loan book as well as new investments. The report concludes that to overcome key barriers to achieving this, it is in the interest of financiers to move together in creating a global standard for maritime-specific climate risk assessments.

Conversion of CO2 pathway for 2ºC into pathways of carbon intensity (gCO2/tnm) under different assumptions of transport demand growth and start year from regulation.

This report is the latest step in Carbon War Room’s work with key partners to ensure that the industry’s financiers support a successful decarbonisation of the shipping industry.

The report builds on the February 2017 research paper by UMAS and Carbon War Room “Navigating Decarbonisation: An approach to evaluate shipping’s risks and opportunities associated with climate change mitigation policy,” which suggests climate transition pathways pose risks to the banks that hold $400 billion of global shipping debt. Adding that, with the onset of climate policies as soon as 2023, there will be a need for significant capital investment to keep vessels competitive.

To read the full report, click in the PDF below

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