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Green change easier at sea than in the air

16 June 2022

Shipping companies are more involved in research than airlines and often have a great opportunity to design their ships themselves. They also find it easier to finance loans than the airlines have, writes the Swedish Transport Agency in a new report.

The report Grönare transporter – en jämförelse mellan flygbolags och rederiers möjligheter att minska sina utsläpp, which the Swedish Transport Agency presents today, shows that the conditions differ between the two industries. While aircraft are mass-produced and have a different certification process, shipping companies have a greater opportunity to design their own vessels with different technologies.

When it comes to financing, one also find differences. Although both shipping companies and airlines have found it more difficult to obtain loans from commercial banks since the financial crisis of 2008/2009, there is an opportunity in shipping to get help from Svenska skeppshypotek to finance loans for shipbuilding. Svenska skeppshypotek can usually provide loans of up to 70 percent of the ship's value, but can in individual cases issue loans of up to 90 percent of the ship's value for smaller shipping companies. There is no equivalent in aviation.

The report also mentions the tanker shipping company Furetank, which in April 2022 became the first shipping company in Sweden to receive a so-called green credit guarantee from the Swedish Export Credit Agency for financing the shipping company's next product and chemical tanks. The guarantee means that EKN reimburses up to 80 percent of the outstanding credit to the lending bank in the event of a loss. Here, too, there is no corresponding example of the air side.

Shipping companies are also (like Furetank) more involved in research projects linked to new vessels than airlines are. The Swedish Transport Agency believes this may be due to the fact that shipping companies have a greater opportunity to influence the design of ships than airlines have for aircraft. This in turn can provide greater financial incentives to actually participate in research projects because one's own business can benefit to a greater extent in relation to competitors.

At present, the use of alternative fuels is limited in both modes of transport. In aviation, in the near future it is basically only about biofuels, while in shipping there are several ways to go. The alternative fuel most used in shipping is LNG, followed by electric power and methanol to a small extent. Shipping also has greater opportunities to influence fuel consumption by influencing driving methods and routes compared with airlines, as air routes are controlled by air traffic control from start to finish.

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