Tuesday, April 25, 2017

Banks Shoulder the Risk to Ship Operators when Retrofitting Carbon Reducing Technology in Vessels

European Scheme to Invest Millions in Greening the Fleet
Shipping News Feature
EUROPE – The European Investment Bank (EIB) and Dutch bank ABN Amro have signed an agreement to unlock €150 million in financing, to support the European shipping industry's aim to reduce its carbon footprint. Open to both inland shipping and seagoing operators, the finance facility will be made available to companies for the retrofitting of existing vessels as well as for projects that envisage the construction of new vessels with a green innovation aspect. EIB Vice-President Pim van Ballekom, said:

“The Bank received a clear signal from the market that there was a financing gap for the greening of shipping fleets. By allowing the EIB to take more risk, the Investment Plan for Europe enabled us to create a new instrument to support shipping companies in complying with the European sustainability standards. This is the second agreement under a €750 million EFSI Green Shipping Guarantee Programme, which was set up after numerous discussions with Dutch counterparts from the public and private sector. We are really looking to ship owners to make use of it so that we can implement it in other countries as well.”

The programme is meant for projects that will improve the environmental performance of transport vessels in terms of diminishing the emission of pollutants as well as increasing fuel efficiency. Projects should be proposed to the ABN Amro Bank and will be subject to their eligibility and risk acceptance criteria. Dutch Minister of Infrastructure and the Environment, Schultz van Haegen, observed:

“Safe and sustainable shipping is essential for the EU maritime shipping business. Greening of EU flagged vessels can support the competitiveness and leading position of EU maritime shipping in the world. The EU EFSI initiative as implemented by the EIB and ABN AMRO in this framework agreement is most important to stimulate the greening of the Dutch fleet.”

The European Investment Bank is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for what it considers sound investment in order to contribute towards EU policy goals. Transport projects accounted for €12.5 billion of the EIB’s investments over 2016. This financing also falls under the EIB-EC ‘cleaner transport facility’ which aims to accelerate the deployment of alternative fuels technology in the transport sector.

The Investment Plan for Europe, the so-called Juncker Plan, is one of the European Commission's top priorities. It focuses on boosting investments to create jobs and growth by making smarter use of new and existing financial resources, removing obstacles to investment and providing visibility and technical assistance to investment projects.

EU Commissioner for Transport Violeta Bulc has made it clear that ensuring more sustainable transport systems and networks is a priority for the administration, with this latest move by the EIB showing a commitment to invest, with the intention of mobilising private finance to support the switch to more sustainable, less polluting power.

The European Fund for Strategic Investments (EFSI) is the central pillar of the Juncker Plan. It provides a first loss guarantee, allowing the EIB to invest in more, often riskier, projects. The EFSI is already showing concrete results. The projects and agreements approved for financing under the EFSI so far are expected to mobilise more than €183 billion in investments and support over 425,000 SMEs across all 28 Member States. In September 2016, President Juncker proposed to extend the EFSI by increasing its firepower and duration as well as reinforcing its strengths. Daphne de Kluis, CEO Commercial Clients ABN AMRO commented:

“We are very happy we can support the Juncker plan through this initiative. The EIB facility is an extra stimulus for ABN AMRO to stimulate our shipping clients to look for sustainable solutions. It fits perfectly with our other efforts to promote sustainable solutions in this important sector.”