projects”.
61 As we have discussed, those “wider benefit projects” are concerned with
the wider geographical benefit, and not a wider sectoral
62 or policy benefit. It is
argued that if a project could be the catalyst for linked future green projects, such a
project should be properly classed as one of “wider benefit”. Although there may be
other financing schemes offered by the EIB which might be available,
63 it is perhaps
counter-productive not to provide for a wider scope of green shipping finance. After
all, it is certainly convenient for applicants to be able to link various activities to a
single application for financing rather than having to make different applications for
different activities of the same central project.
The EIB green shipping finance initiative has the advantage of being structured to
respect the risk appetites of the investors. At a simplistic level, the syndication
system followed in the few examples we considered above allows for the allocation
of the appropriate risk exposure across the different investors. But it is also foreseeable that for certain green projects, especially in shipping, where the range of
specialist investors might be limited, many investment needs may remain unsatiated.
Blending EIB money can thus play a vital role in increasing the risk appetite of
private investors by partially guaranteeing their exposure or by rebalancing their
risk-reward concerns. A 50:50 risk sharing arrangement can, in theory, double the
risk exposure that an investor is prepared to assume. It is further argued that such an
arrangement can do more than that. A risk sharing facility can help investors
re-calibrate their risk perceptions.
64 As the risk perception diminishes, investor
confidence increases and the share of risk or incentive support the public finance
needs to assume can also come down.
One possible criticism of the EIB approach is that the green shipping projects
which are being lauded are large scale—the general assumption is that these projects
need substantial financing and thus would benefit from the EIB schemes. However,
the UK experience has been that there are a good number of start-ups seeking to
upscale their green shipping technology offerings
65 but, other than private equity,
have limited financing options despite the “small” amounts entailed. Also, there are
61 See above, at Part 5.
62 Sectoral is used here to refer to specific sectors of industry or economy.
63 http://www.eib.org/en/products/index.htm.
64 Cooley (1977), Hoffmann et al. (2015), Hoffmann and Post (2017), Froot et al. (1993), and Weber
et al. (2005).
65 See article in City AM (5 November 2018) reporting that London-based CargoMate has developed a platform that helps containerships minimise delays in port, allowing them to sail slower and
save fuel. A company based in Hull, England, called Relmar is developing an AI-powered
maintenance platform for vessels that maximises uptime while minimising risk and cost. A new
report by think tank PUBLIC examines which technologies will transform the maritime trade sector,
and highlights 65 of the most promising maritime startups around the world. One of the key findings
of the report is that there is an opportunity to make the UK a hub for digital innovation in maritime
that will not only drive greater green efficiencies across the industry. (https://view.publitas.com/
public-1/frictionless-trade-report/page/1). However, these start ups are not always clear as to the
availability of public sector financing (such as that from the EIB, Brexit notwithstanding).
Legal Aspects of Green Shipping Finance: Insights from the European. . .
149
61 As we have discussed, those “wider benefit projects” are concerned with
the wider geographical benefit, and not a wider sectoral
62 or policy benefit. It is
argued that if a project could be the catalyst for linked future green projects, such a
project should be properly classed as one of “wider benefit”. Although there may be
other financing schemes offered by the EIB which might be available,
63 it is perhaps
counter-productive not to provide for a wider scope of green shipping finance. After
all, it is certainly convenient for applicants to be able to link various activities to a
single application for financing rather than having to make different applications for
different activities of the same central project.
The EIB green shipping finance initiative has the advantage of being structured to
respect the risk appetites of the investors. At a simplistic level, the syndication
system followed in the few examples we considered above allows for the allocation
of the appropriate risk exposure across the different investors. But it is also foreseeable that for certain green projects, especially in shipping, where the range of
specialist investors might be limited, many investment needs may remain unsatiated.
Blending EIB money can thus play a vital role in increasing the risk appetite of
private investors by partially guaranteeing their exposure or by rebalancing their
risk-reward concerns. A 50:50 risk sharing arrangement can, in theory, double the
risk exposure that an investor is prepared to assume. It is further argued that such an
arrangement can do more than that. A risk sharing facility can help investors
re-calibrate their risk perceptions.
64 As the risk perception diminishes, investor
confidence increases and the share of risk or incentive support the public finance
needs to assume can also come down.
One possible criticism of the EIB approach is that the green shipping projects
which are being lauded are large scale—the general assumption is that these projects
need substantial financing and thus would benefit from the EIB schemes. However,
the UK experience has been that there are a good number of start-ups seeking to
upscale their green shipping technology offerings
65 but, other than private equity,
have limited financing options despite the “small” amounts entailed. Also, there are
61 See above, at Part 5.
62 Sectoral is used here to refer to specific sectors of industry or economy.
63 http://www.eib.org/en/products/index.htm.
64 Cooley (1977), Hoffmann et al. (2015), Hoffmann and Post (2017), Froot et al. (1993), and Weber
et al. (2005).
65 See article in City AM (5 November 2018) reporting that London-based CargoMate has developed a platform that helps containerships minimise delays in port, allowing them to sail slower and
save fuel. A company based in Hull, England, called Relmar is developing an AI-powered
maintenance platform for vessels that maximises uptime while minimising risk and cost. A new
report by think tank PUBLIC examines which technologies will transform the maritime trade sector,
and highlights 65 of the most promising maritime startups around the world. One of the key findings
of the report is that there is an opportunity to make the UK a hub for digital innovation in maritime
that will not only drive greater green efficiencies across the industry. (https://view.publitas.com/
public-1/frictionless-trade-report/page/1). However, these start ups are not always clear as to the
availability of public sector financing (such as that from the EIB, Brexit notwithstanding).
Legal Aspects of Green Shipping Finance: Insights from the European. . .
149