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Lack of finance stopping eco-friendly retrofits by shipowners: MAN

Lack of finance stopping eco-friendly retrofits by shipowners: MAN
Lack of finance and lower fuel prices are discouraging companies from environmental and energy saving retrofits of existing ships according to engine maker MAN.

Speaking at a seminar on Disruptive Innovation for Radical C02 Reductions in Copenhagen, Kjartan Ross, business development of manager for MAN Diesel & Turbo, said that much of the technology already existed, but the challenge was getting the disruptive technology into the market.

While shipping has long, and rightly, prided itself on being the most energy efficient from of transport, he stated: “Being the most energy efficient is not necessarily the most environmentally friendly – and that is a game changer.”

While it may be a game changer current realities of the state of shipping and related finance markets are making change difficult to happen.

“What we are seeing today is not so many of these retrofits are being done,” Kjartan said at the forum, which is part of Danish Maritime Days.

James Mitchell, senior associate with Carbon War Room commented, “What we see in challenging markets is the pay back is not there (for retrofits).”

Low fuel prices have been a factor in reducing to the attractiveness of retrofitting combined with tough market conditions, but another major factor according to MAN is the lack of finance.

MAN has tried to match its banks with the their customers financiers but has found banks very cautious on the shipping industry.

“Banks are reluctant to take on the risk of financing in advance on a retrofit project” he said.

“It is a bit strange from our perspective as these banks already have a lot of money invested in these vessels, and if the don’t help the owner they may go bankrupt.” Kjartan noted it was much cheaper to upgrade an existing vessel than build a new one to an eco-design.

In response MAN has taken the risk with some customers of taking a 20% upfront payment with the remainder paid in installments.

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