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Investing in shipping’s multi-trillion dollar green transition

Harold Malone, Principal at Sea/Switch talks about investing in green ship finance and the race to find the Tesla of the shipping industry?

Seatrade Maritime News: Do you think the shipping industry needs something like a ‘moonshot’ programme to find the technology needed to transition to a zero carbon future?

Harold Malone: Well, I do think the industry does need a significant catalyst to accelerate the efforts, because I think it has lagged a number of other sectors. That's part of what we're trying to do at Sea/Switch with our first project, the Marine Money Decarbonization Index, which is an index of 50 public companies that are investing into that decarbonisation effort really to help identify what those technologies. what those solutions might be.

We have worked with a partner now to create an exchange traded fund that tracks that index, the trades on the New York Stock Exchange under the ticker BSEA, which gives the average person the opportunity to participate in invest into this great moonshot effort, which to us is very important, because it does provide that sort of visibility, and that impetus, which I think is what the industry needs to achieve what are a very aggressive set of goals, which I think are important to all of us as citizens of the world.

Seatrade Maritime News: How are we going to find the Tesla of the shipping industry?

Harold Malone: Well, the shipping industry, in my mind is a very interesting sector that sits a little bit between the automotive sector and the aircraft sector. And, so, it's very much like the automotive sector, and that you have a number of different vessel types, and a range of different manufacturers. But it is, in some circumstances, much closer to the aircraft industry, where you have just two manufacturers, with Boeing in Airbus, and a more standardized product, but that you can go to and really have a bespoke order to your specifications. So I don't necessarily think you'll find a Tesla, being one company that both develops and then ultimately manufactures its own technology, I think what we're more likely to see is a unique technology solution that can then be adopted and implemented more broadly by the industry.

Seatrade Maritime News: How are we going to pay for it?

Harold Malone: I think it's going to require contributions across the entire spectrum, starting with the existing owners of the assets, the lenders, and the banks that service the industry. But I also think it's going to take action from governments, in particular, to help catalyze the initial investment is needed to prove out and develop some of these technologies. And then ultimately, is going to require the participation of the end consumer, be that the manufacturing company that relies upon the ships or in the case of, say, the container industry, the ultimate, end consumer of the goods that are being transported because this is a cost that I don't think has been factored into people's consumption patterns, and has resulted in an impact on the planet that we now need to account for.

So, I think the financing will ultimately follow the right technology, it's going to take a range of participation from different industry participants.

Seatrade Maritime News: How much is going to cost?

Harold Malone: Well I think the estimates I've seen have ranged from $1.5trn to as high to $3-4trn, so you're talking about an enormous amount of capital. But to put the industry's footprint in context, the shipping industry's carbon footprint is roughly 25% of the size of the passenger transportation industry, and roughly a third of the size of the large trucking industry.

So, you're talking about a tremendous industry that is behind and the capital investment that is required, yet is an industry that really is important to all of us, based on what I would refer to as the 70/80/90 rule, which is, 70% of the planet surface is covered with water, 80% of all humans live near that water, and 90% of everything that we consume is transported by water.

So, this is a sector that I think is behind it does need that sort of catalyst, and it's going to require each of us contributing to make that transition happen.