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Bank survey says energy efficiency a growing factor in ship financing Featured

A new survey has revealed the increasing use of energy efficiency data by banks when considering whether or not to finance the building and retrofits of vessels.

{mprestriction ids="1,2"}The survey was conducted by Carbon War Room, a non-profit organisation established by Richard Branson. It found that financial institutions such as HSH Nordbank and KfW IPEX-Bank are using efficiency data when 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. 

“As a consequence of the correlation of energy efficiency and loan risk, we have analysed our shipping portfolio based on the methodology of the Energy Efficiency Design Index (EEDI) and implemented design efficiency criteria in our credit approval process,” said Carsten Wiebers, global head of Maritime Industries, KfW IPEX-Bank.

“In view of the beneficial risk profile and environmental benefits, we favour eco-ships over ships with poorer energy efficiency… 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.”

According to the survey, banks are seeing the development of a two-tier market in commercial shipping, comprising high- and low-efficiency vessels. Although eco-efficient vessels have a higher cost at new build stage, they are more likely to be chartered, maintain asset value over time, and have a longer lifespan, and thus present a lower investment risk for financial institutions.{/mprestriction}  

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