Sustainable Shipping Progress: Poseidon Principles’ Impact at 5 Years

By
Mfame Editor
-
31

  • The Poseidon Principles, introduced in 2019, have grown to include 35 banks from 14 countries.
  • Challenges remain in financing retrofits, dual-fuel vessels, and overcoming higher costs and fuel availability issues.
  • Despite these challenges, the shipping industry’s green transition is evident in the increasing number of eco-friendly and dual-fuel vessels entering service.

Since its launch in 2019, the Poseidon Principles have become a cornerstone in advancing sustainable ship financing. With a growing roster of signatories and significant progress in eco-friendly vessel adoption, the initiative marks a pivotal shift towards reducing carbon emissions in the shipping industry. However, challenges such as financing retrofits and addressing fuel-related costs must be overcome to sustain momentum in the green transition, reports Breakweave Advisors.

Growth of the Poseidon Principles

Initial Launch: Introduced in 2019 with 11 banks from 5 countries.

Current Status: 35 banks from 14 countries, accounting for 80% of global ship financing ($240 billion).

Signatories: Includes major financial institutions like BNP Paribas, Credit Agricole, DNB, and Nordea Bank.

Persistent Challenges

  1. Debt Financing for Retrofits: Shipowners face difficulties in securing loans for upgrading older vessels.
  2. Reluctance to Finance Dual-Fuel Vessels: Hesitation from financial institutions due to uncertainties.
  3. Cost and Fuel Availability: High costs and a limited supply of cleaner fuels remain key concerns for shipowners.

Eco-Friendly Fleet and Dual-Fuel Expansion

Current Dual-Fuel Fleet:

  1. 2,119 vessels, 123 million GT (7.4% of global fleet).
  2. 84% of tonnage is LNG dual-fuel (1,248 units, 102.93 million GT).

Orderbook Growth:

  1. Dual-fuel vessels: 1,821 units (143 million GT).
  2. LNG dual-fuel dominates the orderbook with 1,042 vessels (103.74 million GT).
  3. Dual-fuel share in the orderbook rose from 16% in 2018 to 52% today.

Declining Recycling Activity

Recycling activity peaked in 2020-2021 but has declined significantly in the past three years.

Subdued scrapping volumes have led to an aging fleet, delaying modernization efforts.

Stricter greenhouse gas emission regulations may encourage earlier recycling of older ships, aiding fleet renewal.

Concluding Remarks

While the Poseidon Principles have driven progress in sustainable ship financing, challenges persist. Declining scrapping rates and the fleet’s aging profile hinder modernization efforts.

Monitoring demolition activity will be crucial to ensure continued fleet renewal and support the shipping industry’s green transition.

Did you subscribe to our daily Newsletter?

It’s Free Click here to Subscribe!

Source: Breakweave Advisors