Netherlands bank ABN AMRO says it is time for action on energy transition lending for shipping.
The Dutch lender has joined forces with shipowner Stena Bulk and Proman to back the sector’s first sustainable methanol shipping fund, called Low Emission Methanol Shipping Company (LEMSCO), to finance existing ships and newbuildings.
ABN AMRO’s managing director of shipping coverage Netherlands, Remco Jongkind, told TradeWinds the new energies team, which includes a chemical desk, was already in contact with Swiss methanol producer Proman.
“And once we learned about the fact that Proman was also moving and utilising their expertise into the shipping sector, the connection was made,” he said.
“And from there, we have been closely cooperating on structuring a transaction that was also qualified as a green loan by DNV, which is one of our partners on a number of projects we work on,” he added.
Jongkind explained the lender wants to emerge as one of the world’s leading decarbonisation banks for shipping.
“So we need to put our money where our mouth is and also actually transact. And this was a perfect deal for us to get involved,” the managing director said.
Norwegian class society DNV helped structure “a truly green transaction, which is hopefully the first one of this kind and many to follow”, Jongkind added.
The bank has several initiatives and work groups aiming to find a pathway to net zero.
“It means we need to decarbonise our portfolio. And I think what’s very important to note is that those initiatives like LEMSCO are a requirement almost for banks to have them into your portfolio in order to meet your target,” Jongkind said.
He also said that retrofits will not be neglected.
Innovative models
“We don’t forget owners with existing vessels that need to retrofit. So retrofit might also mean eventually running your vessels on methanol,” the ABN AMRO boss explained.
ABN AMRO is looking at offering a retrofit revolving credit facility or other financing facilities, he added.
“We find different ways: vessels that are already running on methanol, for example, or vessels that might be able to run on methanol in the near future,” Jongkind said.
“The pathway is clear. And the investments that are required to get there are very significant. So there’s a big role to play for financial institutions as well.”
LEMSCO will have an initial portfolio of four methanol-fuelled MR tankers owned by Proman and Stena Bulk, financed by ABN AMRO.
