In 2023, the global shipping industry raised its collective climate ambition with a new International Maritime Organization objective of reaching net zero by or around 2050. Decarbonising the global shipping fleet will require capital for cleaner vessels and fuels, engine retrofits, and energy saving technologies.

Understanding the key barriers to shipping transition finance is critical to overcoming them. The report explores these challenges and pathways to address them:

• Financing retrofit and energy efficiency technologies is hampered by loan security challenges. Attracting financing is a challenge as banks are hesitant to lend for smaller amounts and against assets that are already encumbered by other finance providers.
• Shipping may not fit with banks’ green finance ambitions. Banks often focus on short-term decarbonisation at the expense of supporting the transition of the real economy.
• Clean vessels face higher financing costs, but conventional vessels may be exposed to unpriced climate risk. Credit risk assessments may underestimate the financial threats to conventional vessels.
• Lack of clarity and infrastructure for clean fuels impede green investment. While a growing number of new ships have dual-fuel capabilities, they will continue running on conventional fuels until there is greater technological consensus and infrastructure capacity.