Bloomberg News

Korea Finance Offers Loans for Environment-Friendly Ship Orders

June 01, 2011

June 1 (Bloomberg) -- Korea Finance Corp., South Korea’s state-run financier, is offering global shipowners lower interest rates on loans for orders with the nation’s shipyards to build vessels that emit less carbon.

Korea Finance aims to offer 50 billion won ($46 million) this year under the new plan, the agency said today in an e- mailed statement. Shipowners have to obtain certifications from Det Norske Veritas Korea to prove the vessel being built will use technology that will reduce emissions, it said.

Shipbuilders are developing new engines as the International Maritime Organization draws up regulations to lower carbon and sulfur emissions to pare pollution. The shipping industry emits about 3 percent of the world’s carbon each year, equivalent to 1 billion tons, according to Thor Jorgen Guttormsen, president of the Norwegian Shipowners’ Association.

“We are taking an initiative in this plan because this will help generate demand for environmentally-friendly ships and speed up the development of relevant technology,” Korea Finance said in the statement.

Korea Finance plans to provide 250 billion won in ship loans this year, 8.7 percent more than the 230 billion won offered to shipowners in 2010, it said.

Daewoo Shipbuilding & Marine Engineering Co., the world’s third-largest shipyard, and Man Diesel & Turbo last month developed an engine that will be mainly powered by liquefied natural gas. The new engine will reduce carbon emissions by 23 percent and nitrogen dioxide by 80 percent, according to Daewoo.

Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding, the world’s three biggest shipyards based in South Korea, accounted for 21 percent of the world’s order book at the end of April, according to Clarkson Plc.

Sulfur in fuels must be reduced to 0.5 percent by 2020 from the current 4.5 percent as part of IMO efforts to cut pollution from the shipping industry. Sulfur dioxide is one of the causes of acid rain. In more environmentally sensitive areas, the upper limit will need to drop to 0.1 percent by 2015 from 1 percent.

--Editors: Suresh Seshadri, Frank Longid

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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