Our survey respondents favored government grants and subsidies as the key to bridging the gap between the investment needed to make shipping sustainable and the available funds. Over two thirds of respondents ranked these as the most likely source of funds, with tax credits not far behind. While 46% of respondents considered that bank financing would be important in the green transition, there was less enthusiasm for private equity. Only around 19% of those surveyed ranked PE funds as one of the industry’s most likely saviors. 

This reflects the current market on sustainable financing in shipping, where no single frontrunner has yet emerged to jump in at the deep end. It certainly makes sense that governments would need to step up, since green and sustainable initiatives are largely driven by government policy. 

At present, market participants seem to agree that there is no silver bullet to meeting IMO 2050 sustainability goals. As a result, it can be difficult for financiers to position themselves appropriately in the market, with the products needed to support shipowners in their transition likely to vary depending on the vessel type and the steps being taken to improve sustainability metrics. 

Progress in this area is slow, with some investors preferring to watch from the sidelines to see how the market develops, but the reality is that a substantial dollar amount is required to come even close to the sustainability targets the market is aspiring to. As such, no matter where the money is coming from, investment opportunities will be plentiful over the coming years.

Survey results: This bar chart shows that 62% of respondents selected government grant or subsidy as the most likely source of financing the transition to sustainable fuels, followed by bank financing (46%), tax credit or allowance (43%), project financing (32%), existing cash reserves (24%), financing by customers (24%), debt financing from government sources (19%), debt capital markets (11%), private equity (11%), debt from private credit fund (8%), private credit financing (8%) and other (5%). Please note that respondents were able to select more than one option.