EDF and The Decarb Hub explore innovative financing concepts to unlock capital for clean fuels, infrastructure and retrofits.

Environmental Defense Fund (EDF) and Lloyd's Register Maritime Decarbonisation Hub (Decarb Hub), a partnership between Lloyd’s Register Group and Lloyd’s Register Foundation, have today published Navigating the Net-Zero Transition - exploring innovative concepts to close the trillion-plus investment gap threatening the sector's climate goals. The report, which builds on two years of research, presents insights across the maritime value chain leveraging over 40 interviews with shipowners, financiers, fuel developers, insurers, academics and NGOs, in response to warnings that shipping emissions could reach 130% of 2008 levels by 2050 without adequate funding.

"Without strong action, emissions from maritime shipping are projected to rise, putting the sector far off track to transition away from fossil fuels by 2050,” said Guillaume Morauw, Sustainable Finance Senior Policy Analyst at Environmental Defense Fund and co-author of the report.

Maritime shipping plays a unique role in the global economy, carrying nearly 80% of global trade and being the 6th largest emitter of greenhouse gas emissions globally, which makes the sector’s decarbonisation challenge especially acute. The sheer capital expenditure intensity of ships and fuel infrastructure creates major financing needs to achieve the sector’s transition away from fossil fuels. Recent progress to tackle harmful emissions, including the International Maritime Organization’s approval of a framework that would make maritime shipping the first sector to pay a price on emissions, risks stalling without sufficient support from public and private financiers. 

“Additional, innovative mechanisms to de-risk projects and channel capital at scale are essential. By backing energy-saving retrofits, the lending platform helps shipowners cut emissions and mitigate transition risks, while giving financiers a practical way to make an impact and decarbonise their portfolios,” added Morauw.

Investors' climate ambitions can often clash with shipping's realities of high baseline emissions and limited zero-emission options. This disconnect is already evident: a survey from 2023 states that senior finance professionals contemplate divesting from maritime due to ESG risks, ultimately making affordable capital harder to secure especially for smaller shipowners.

Financiers remain cautious about one of the toughest industries to decarbonise, while scaling zero- and near-zero emission fuel projects demands huge capital expenditure, in some cases up to $2 billion for infrastructure, storage and terminal facilities. 

“These challenges are evident in the lack of communication between shipping and infrastructure finance, despite their interdependence. To overcome this, fuel procurement strategies must evolve, and bold collaboration across the maritime value chain is critical,” said Dana Rodriguez, Programme Manager at The Decarb Hub and report co-author.

The report explores three concepts to help unlock investments by de-risking projects, broadening access to affordable capital and showing the wider benefits of decarbonisation:

  • Maritime Multiplier: a carbon accounting tool that quantifies the supply-chain benefits of investing in cleaner ships. It shows how shipping decarbonisation can deliver “cascading” emissions reductions across multiple sectors and investor portfolios.
  • Lending Platform for Energy Efficiency: a blended-finance platform pooling retrofit projects to lower risk, build market maturity and expand access to affordable capital in particular for smaller shipowners. It focuses on energy-saving technologies to cut emissions in the near term and reduce transition risks.
  • Time Stacked Offtake (TSO): reshapes clean fuel contracts by breaking long-term offtake agreements into shorter, stackable tranches. This gives buyers more flexibility while providing fuel developers with revenue certainty. TSO could be managed by fuel producers, development banks or coalitions such as the Zero Emission Maritime Buyers Alliance (ZEMBA).

"Silos are holding back shipping's transition. Finance and shipping must meet in the middle to deliver a sustainable and affordable transition,” added Rodriguez.

Next Phase: Collaboration and Pilot Projects

EDF and the Decarb Hub are now inviting feedback from stakeholders to help refine the concepts and move them toward commercial viability. They also invite partners - including banks, shipowners, fuel developers and public finance institutions - to take part in pilot projects that put these ideas into practice. The report’s findings will be shared at a closed meeting during London International Shipping Week on 15 September.

 

The report can be downloaded here.