Supply chain equation will help decide future fuel financing, says KfW IPEX-Bank

Emerging fuels, such as hydrogen and ammonia, will likely benefit from marine finance once supply chains and infrastructure becomes clearer, says Holger Apel, Managing Director Global Head Maritime Industries, KfW IPEX-Bank.

Speaking during a panel session at SMM today (4 February), Apel said there was a willingness to support shipping’s decarbonisation transition and pointed to LNG as an example, which had moved beyond the so-called chicken-and-egg dilemma.

‘The [marine LNG] supply side is intact, and one has to keep that in mind if you look into future developments about hydrogen, about ammonia and so on,’ said Apel.

‘This supply side [for future fuels] still has to be developed. It has to be scaled up and it has to be commercialised,’ said Apel, adding, ‘it’s extremely helpful to have all of that part of the puzzle in mind when we look into fuel options.’

Financial institutions will of course play a central role in shaping shipping’s zero-emission future, but Apel said it was KfW IPEX-Bank’s ‘deep understanding’ that the ‘real economy has to pave the way’, adding that shipowners, research fellows, class societies and engine manufacturers – ‘all our partners’ – would play a part in making these decisions.

‘Yes, we engage, we talk to the clients, we build up our own knowledge on fuels and engines options, but of course we would always shy away from telling our clients what to do because it’s an operational question for them, it’s a commercial question for them,’ said Apel.

As shipping searches for the ways and means of complying with increasingly stringent environmental regulations, access to finance for next-generation vessels will be crucial. But Apel also highlighted the importance of retrofits for marine finance.

‘You have an existing fleet, and those ships are locked in for many, many years and they are valuable as assets, so there is much you can do about this with retrofits and I think, we as a bank, it’s part of our brand to support that too,’ said Apel. ‘It’s modern technology, it mainly comes out of Europe, so it’s very good also to look into that, to make ships again and again more fit for the future – that is important also for financing.’

It will not only be shipping companies that require financial capital to ensure they are able to transition to the next generation of marine fuels. Alternative fuel infrastructure will be necessary to connect the next generation of ships with the novel solutions to fuel them.

‘We are fully on stream,’ said Apel, who pointed to KfW IPEX-Bank’s involvement with marine LNG as an example. ‘Here [LNG], we support…bunkering ships, we support FSRUs, all parts of the onshore and the offshore infrastructure which is needed…’

Looking further down the track, Apel said any other attempts to develop new markets ‘have to be seen in the context of market size, of business rationale’, adding, ‘first of all, the real industry has to decide what options are really attractive for them…’

The framing of the new environment for futures fuels would also require the guidance of governments – for instance.

In the December 2020/January 2021 edition of’s sister publication Bunkerspot, KfW IPEX-Bank’s Sebastian Blum and Sebastian Fenk talk to Lesley Bankes-Hughes about financing the decarbonisation journey. Click here to read the article.

Rhys Berry

Rhys Berry

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