GCMD strikes sustainable finance partnership with ADB to accelerate decarbonization at sea

The Global Centre for Maritime Decarbonization (GCMD) has penned a contract with the Asian Development Bank (ADB) to give speed to maritime decarbonization efforts through sustainable finance.

As disclosed, the knowledge partnership will strive to advance green financing pathways that support a “sustainable and resilient” maritime sector.

More specifically, according to GCMD, by grounding green financing in ‘verified’ emissions reduction data, the bipartite initiative will aim to build investor confidence, unlock capital for ‘scalable’ decarbonization solutions, and speed up the adoption of energy efficiency technologies (EETs) in shipping.

As informed, the deal between the two parties was signed at a recent meeting in Milan, Italy, against the backdrop of the release of ADB’s Sustainable and Resilient Maritime Fund (SRMF). The SMRF is said to be envisioned to allow for a “future-ready” shipping industry by focusing on five key areas:

• Investing in port infrastructure;
• Accelerating the application of alternative energy sources;
• Closing financing gaps;
• Harmonizing regional policies.

“Through the Sustainable and Resilient Maritime initiative and associated new funding arrangements being developed, we are supporting our client countries to modernise ports, strengthen regional trade connectivity, and de-risk investments that drive greener supply chains,” Hideaki Iwasaki, Director General, Sectors Department 1, ADB, underscored.

Energy efficiency technologies are considered a “safe path forward” when it comes to slashing harmful pollutant emissions, given that these solutions can lead to ‘significant’ fuel savings. Representatives from GCMD have noted, however, that EETs face certain stumbling blocks, primarily related to the challenges with accurately quantifying the fuel savings, which can lead to uncertainty for maritime industry stakeholders.

It is understood that GCMD has been making efforts to address this gap. Namely, the organization has shared that it is currently developing and testing methodologies to validate fuel savings through onboard sensors, with plans to also introduce the Pay-As-You-Save (PAYS) financing model.

As elaborated, under PAYS, investments in EETs can be repaid over time, with these payments directly related to confirmed fuel reductions.

“At this critical juncture, the IMO’s announcement of a global emissions pricing mechanism sends the clearest signal yet that urgent action is required—not only to advance decarbonisation, but also to safeguard the long-term commercial viability of shipowners,” Lynn Loo, CEO of GCMD, highlighted.

“Energy efficiency technologies can play a vital role by reducing fuel consumption, thereby lowering the penalties shipowners will face under IMO’s framework. We believe that the Pay-As-You-Save model can uniquely accelerate and scale the adoption of these critical solutions,” Loo further added.

Green financing, which refers to financial instruments such as green loans, sustainability-linked funds and green bonds, is increasingly important in the maritime industry’s transition toward net zero. It is believed that, as the sector aims to cut its greenhouse gas (GHG) emissions—accounting for roughly 3% of global emissions—green finance can offer ‘essential’ tools to support decarbonization initiatives.

Regulatory frameworks have had a major influence on these schemes, with the IMO Net-Zero Framework set to unpack a carbon pricing mechanism, requiring shipping players to pay for emissions, and the EU ETS, the inclusion of which into shipping means stakeholders operating in Europe must account for their emissions.

Although some hurdles within this space remain, including the need for more standardized criteria for green projects, the momentum toward sustainable shipping, especially if backed by green financing, does not appear to be waning.

Namely, according to the December 2024 data published by Poseidon Principles—a global framework for financial institutions to assess and disclose the climate alignment of their shipping portfolios—the worldwide maritime transportation industry’s course toward climate neutrality is steady, with the majority of the finance portfolio moving closer and closer to the IMO’s decarbonization target(s).

The entity’s report also showed that collaboration and engagement between financial institutions and their shipping clients had assumed a faster pace.