Financing green ships through export credit schemes

Abstract In response to the significant emission reduction potential of ocean transport, researchers and industry stakeholders have come up with green solutions for addressing the industry's environmental challenges. The variety of technical measures and the even wider range of their potential combinations call for generalized financing approaches to support technological driven environmental progress. This article is one of the first to present a financing model based on export credit schemes (ECS) that could be applied to retrofits of existing ships and green new build ships alike. A market evidence analysis followed by an event study based on 20 ECS loans and stock returns over an approximately 5 years period is carried out in the context of the cruise industry to introduce ECS concepts to the area of transportation research and to develop empirically grounded model assumptions. A scenario-simulation based model application using an empirical sample of bond spread curves from the leisure and transport industry indicates that the potential capital structure benefit is highest for the retrofit case. The importance of a constant dialogue between technical and financial decision-makers is emphasized, as ECS are linked to technical decisions such as selection of shipyards and manufacturers.