Decarbonisation of industry tends to be well received by IJGlobal ESG judges and this submission – which involves the purchase and upgrade of 4 second hand shipping vessels – hit the right note… not least because it is in an infrastructure sector.

The transaction was led by Damen Marine Components in partnership with Atal Solutions, underpinned by a groundbreaking financing structure for $123.7 million (USD funding package) with a 12-year tenor and the vessel owners requiring only 15% downpayment.

One of the IJGlobal ESG Awards 2024 judges said: “This is exactly what we need to see – the decarbonisation of shipping and a great example of circular economy.”

MetLife Investment Management provided roughly 80% of the financing for this transaction, while also helping to structure a deal that enables considerable emissions reduction with conventional fuels – rather than wait for the emergence of new technologies – and generate a positive environmental impact in the shortest possible timeframe.

According to the submission: “This can accelerate the transition to more sustainable shipping because it enables significant advancements in sustainable shipping within a commercially viable model. This project could pave the way for fast tracking the retrofit of existing vessels worldwide.”

The primary purpose of the transaction is to “greenify” existing vessels, significantly reducing emissions and fuel usage as well as extending their lifecycle by about 10 years.

The retrofit features 8 different proven technologies, which will result in bulk carriers consuming at least 20% less fuel and reducing up to 99% greenhouse gases (GHG).

The increased efficiency paves the way for these and other existing vessels to sail in compliance with recent regulations such as the Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII).

The retrofits financed through the deal are expected to deliver several environmental benefits, including:

• emission reductions – contributing to SDG 13
• air pollution mitigation – SDG 3
• prevention of spread of aquatic invasive species – SDG 14

The energy efficiency measures to be retrofitted span both mature and more innovative technologies, which are expected to position the vessels to meet current emission reduction regulations, as well as being prepared to face more stringent requirements.

Bulk carriers are currently the biggest polluters in the transport sector due to their heavy workload and long trips, responsible for 440 million metric tons of CO2.

As a result of this transaction, the vessels will be upgraded to levels exceeding the green environmental standards. When completed, it is estimated that this project will result in:

• 75% reduction in particulate matter
• 20% reduction in fuel consumption
• 99% reduction in CO2, SO and NO
• increase vessel lifetimes by 10 years
• reduce overall operational expenses