A recent study by the UCL Energy Institute has uncovered a critical issue in green financing for the shipping industry. While banks offer cheaper loans to shipping companies with strong climate records, they do not extend these benefits to individual low-carbon ships.
According to UCL Energy Institute, this gap suggests that current financing practices may not effectively promote the adoption of greener technologies in shipping.
Banks reward companies with good climate scores, but loan terms for individual ships do not reflect their carbon efficiency. “This disconnect could undermine efforts to reduce emissions,” the study highlights.
With a significant portion of the fleet still using fossil fuels, there is a growing risk of stranded assets as climate regulations tighten, potentially leading to financial losses.
“While lenders recognise the need for decarbonisation, they aren’t yet incentivising more carbon-efficient ships through better loan terms,” said the lead author, Marie Fricaudet.
“The data shows that banks are making decisions on a corporate basis rather than evaluating individual ships’ carbon performance. This needs to change,” noted the co-author, Dr. Sophia Parker.
The study emphasises the need for stronger regulations that link loan terms directly to the carbon performance of both companies and individual ships.
Voluntary initiatives alone are insufficient to drive the necessary change in the industry, the study says.
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