With the maritime industry undergoing unprecedented environmental, geopolitical, and technological transformations, discussions centred on mitigating risks and leveraging opportunities in green finance. Reed Smith’s market-leading shipping practice, alongside DNV, the world’s leading classification society and maritime advisor, provided valuable insights into the shifting regulatory and financial frameworks.
Antonia Panayides (pictured above), partner in Reed Smith’s Transportation Industry Group, shared updates on emissions regulations, particularly FuelEU Maritime. She said: “The FuelEU Maritime Clause for Time Charter Parties is important for the industry, as the Regulation expressly provides that parties should look to their contractual agreements to implement the ‘polluter pays’ principle.”
Panayides, who served on the BIMCO drafting committee for FuelEU Maritime, highlighted that FuelEU impacts a wide range of shipping contracts. She said: “FuelEU is often overlooked in sale and purchase transactions, but it is a critical factor. If I purchase a vessel today and know it was in deficit from January to March, that shortfall will appear on my books—unless I address it in the remainder of the calendar year. This must be factored into negotiations.
“Similarly, if I am buying or selling a vessel with a surplus from using biofuel, that surplus has tangible value and should be reflected in the transaction.”
The seminar also examined the role of banks in ship lending to support climate targets, transaction risks in green maritime investments, and the impact of upcoming EU and UK regulations.
Tallat Hussain and Wim Vandenberghe, partners at Reed Smith, provided an overview of key regulatory changes, including the EU and UK Emissions Trading Schemes (ETS), to cover maritime emissions, supply chain due diligence and monetising green attributes, as well as the potential impact of changing geopolitical priorities on EU policies and implementation programs.
Hussain stressed the need for the shipping industry to stay ahead of evolving regulations, particularly in emissions trading, stating, “Charterers dictate a vessel’s emissions, raising critical questions that need to be addressed contractually. These include how emissions data is shared and the mechanics of transferring allowances.”
She also noted that that EU sustainability due diligence faces uncertainty, especially if the proposed “Protect USA” Act is passed, which could impact its implementation. “This underscores the need for the EU to remain agile and prepared for potential legislative shifts,” Hussain added.
Susan Riitala, partner in the asset finance team of Reed Smith’s Transportation Industry Group, who co-chaired the event, said: “The lively discussion and enthusiasm from participants underscores the importance of green finance to the maritime industry and we look forward to co-operating with DNV again on future events on this topic.”
Key highlights from the event include:
- Keynote speaker: Jeremy Dean of Hayfin Capital Management – which has a dedicated maritime vertical – welcomed guests with a keynote speech providing insights into the firm’s approach and the evolution of sustainability-linked financing in the sector more broadly.
- Market Insights: James Milne and Jakub Walenkiewicz (DNV) provided an overview of the current state of sustainable ship finance.
- The 1.5°C Initiative: Jan-Henrik Hübner (DNV) discussed the role of 11 banks overseeing $95 billion in ship lending to achieve climate targets.
- Legal Perspectives: Antonia Panayides (Reed Smith) presented on the legal aspects of FuelEU maritime regulations.
- Transaction risks in green maritime: Martin Davies (DNV) shared DNV’s recent experience with transaction risks and uncertainties.
- Upcoming regulations: Tallat Hussain and Wim Vandenberghe (Reed Smith) analysed the impact of impending EU and UK regulations on maritime shipping.
- Panel discussion on sustainable shipping finance: Speakers, including Catriona Henderson (Reed Smith), Tobias Backer (Pelagic Capital), Nikos Benetis (Greenheart Management), Guillaume Dufour (SMBC Bank) and Dr. Jan-Henrik Hübner (DNV), engaged in a thought-provoking discussion on the future of green shipping investments.
For more details on upcoming events and insights, visit www.reedsmith.com.
