First LNG bunkering vessel in France: the shipping industry accelerates its energy transition
"Gas Vitality" is owned by Emerald Blue Maritime S.A.S. (100% subsidiary of Japan-based company Mitsui OSK Lines Ltd (MOL)) and will be chartered on a long-term basis to an affiliate of France-headquartered energy company TotalEnergies in the port of Marseille-Fos.
New targets, new fuels
Reducing greenhouse gas (GHG) emissions is one of the priorities of the shipping industry, with the International Maritime Organization (IMO) targeting a 50% reduction in emissions from the industry by 20501. The shipping industry is exploring zero-carbon fuels – such as hydrogen and electric power – with the goal of introducing the first commercially viable zero-emission ships by 20302.
But to enable shipping companies to start reducing emissions today, transition fuels such as Liquefied Natural Gas (LNG) are part of the solution, providing significant air quality benefits and contributing to reduce CO2 emissions when compared to very low sulphur fuel oil – a significant first step in the shipping sector’s net-zero journey.
A Landmark Project
The vessel ‘Gas Vitality’ is the very first LNG bunkering vessel to be deployed in France.
Gas Vitality is ultimately owned by Japan-based Mitsui OSK Lines Ltd (MOL), one of the largest shipowners in the world. The vessel is chartered on a long-term basis to an affiliate of France-headquartered energy company TotalEnergies in the port of Marseille-Fos. The vessel is 135 meters long and 24 meters wide and will be able to load up to 18,600 m3 of LNG, stored in GTT Mark III membrane tanks. With this vessel, TotalEnergies will supply the new 15,000 TEU container ships of CMA CGM as well as the MSC Cruises liners running on LNG.
An Inaugural Sustainability Linked Loan supported by a Transition Framework
Societe Generale has co-structured a Transition Framework relying on MOL’s overarching climate ambitions and the Sustainability Linked Loan Principles3 published by the LMA4.
Leveraging on MOL's climate transition set forth in the "MOL Group Environmental Vision 2.1.5" which commits the Group to achieve net zero GHG emissions by 2050 ahead of IMO’s ambitions, Societe Generale has helped MOL to develop a Transition Loan framework based on the Climate Transition Finance Handbook6 and the Sustainability Linked Loan Principles.
Under the sustainability linked mechanism, the margin of the loan varies on a Key Performance Indicator (KPI). In this financing, the KPI is the average Energy Efficiency Operational Indicator (EEOI) of MOL’s fleet to be assessed on a yearly basis and targeting to align with the Paris Agreement objective of holding the increase in the global average temperature to well below 2°C above pre-industrial levels.
The innovative loan structure has been reviewed by the third-party DNV Business Assurance Japan7, based notably on the Climate Transition Finance Handbook and the Sustainability Linked Loan Principles.
Societe Generale’s role in the maritime energy transition
This is a remarkable financing in two respects. It supports MOL to deliver a key LNG bunkering project in Europe, directly contributing to the industry’s decarbonisation. This transaction is also the first ever transition-linked loan based on MOL’s energy transition strategy, coupled with a sustainability-linked feature incentivizing the Group to improve its fleet carbon efficiency.
There isn’t 100% clean fuel for ship so far. We believe the LNG, as a transition fuel, will play a critical role in bridging the gap to the zero-carbon shipping of the future. We are pleased to work with Societe Generale to contribute the decarbonisation of shipping industry.
This transaction is part of several initiatives carried by Societe Generale to lead the financing of the shipping industry’s energy transition, like the first ever Climate Bond Initiative-certified Green Loan in shipping closed in 2021.
Societe Generale is also a member of SEA\LNG, a multi-sector industry coalition promoting the use of LNG as a marine fuel, as an immediate solution to contribute to the decarbonisation of the industry whilst zero carbon technologies develop.
Image source: MOL