- As Owners Repay Loans, Lenders Rethink Green Finance Strategy.
- Fading ESG Momentum and Market Shifts Challenge Green Ship Finance.
- Thin Margins and Cash-Heavy Owners Undercut Green Shipping Loans.
Green ship finance caused a splash when it first appeared, touted as a solution to decarbonize shipping. But in the current climate—political and economic—the momentum has changed, reports Lloyd’s List.
Uncertain Seas for Sustainable Lending
Lenders now face many of the same obstacles as shipowners: unclear regulatory pathways, rapidly evolving technologies, and a lack of standardized definitions around what truly qualifies as green. These factors complicate decision-making and create hesitancy around long-term investments.
Pandemic Profits Shift the Balance of Power
Adding to the complication, shipowners are not as dependent on outside financing. They are still reeling from record profits made during the pandemic years. Having money in hand, they’re prepaying loans, minimizing the need for shipping finance across the board. This leaves lenders scrambling just to keep their books.
Thin Margins and Tough Competition
Even if funding is necessary, intense rivalry among lenders has reduced margins heavily. There isn’t much flexibility to provide loan takers incentives—lower rates of interest—is available for going for cleaner objectives. Therefore, the connection between cleaner targets and monetary rewards is weakened.
Political Winds and ESG Uncertainty
The political environment is changing too. With President Trump back in power, environmental, social, and governance (ESG) investing comes under new scrutiny. This might affect rules and investor attitudes, further clouding the future of green finance in shipping. Nevertheless, it is uncertain if ESG is really on its way out—or simply changing.
Expert Views on the Future
This week’s Lloyd’s List podcast features senior reporter Declan Bush interviewing:
- Jan-Henrik Huebner, Global Shipping Advisory Practice Head, DNV Maritime
- Tobias Backer, Executive Director, Pelagic Capital
Together, they discuss how shipping finance is evolving in response to the shifting currents of regulation, economics, and politics—and what the future may hold for green lending.
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Source: Lloyd’s List
