Whitepaper: GCMD explores PAYS financing mechanism in boosting maritime EET adoption

The Global Centre for Maritime Decarbonisation (GCMD) on Wednesday (6 March) released its latest whitepaper on maritime energy efficiency technologies (EET) retrofits. 

GCMD said commercial barriers that are a result of business-as-usual operations in the industry are limiting the scaling of energy efficiency technologies in shipping. 

“The inability to quantify variable performance of EETs alongside split incentives are hindering investments into new and high potential EETs,” it said on its whitepaper titled Pay-As-You-Save: Closing the data-financing gap to turbocharge maritime Energy Efficiency Technologies (EET) retrofits.

“Our whitepaper explores how a Pay-As-You-Save (PAYS) financing mechanism, combined with best-in-class data standards, can turbocharge EET adoption.”

The paper explored the data-financing gap that is plaguing EET adoption and how PAYS built upon shared-risk contractual agreements can stimulate third party investment into EET. 

According to the paper, PAYS is a financing model that has been successfully used in other sectors to accelerate the adoption of energy efficiency solutions. 

“Applied to the building sector, PAYS works by redistributing upfront installation costs and then recouping them through the tangible savings achieved on the tenant’s monthly energy bill,” the paper said.

For PAYS to be effectively applied in the maritime sector, a complete solution built on a shared risk approach is critical, one on which multi-party collaboration agreements among partners that span the entire value chain has to be developed.

In the GCMD-BCG survey, more than 50% of the survey respondents indicated PAYS as a viable pathway to encourage broader adoption of EETs.

To specifically enable PAYS in the maritime sector, three types of collaborative agreements must come together, namely agreements that specify the terms for technology installation, data validation, and data-driven financing.

Note: The full whitepaper titled ‘Pay-As-You-Save: Closing the data-financing gap to turbocharge maritime Energy Efficiency Technologies (EET) retrofits’ can be viewed here.

Photo credit: Global Centre for Maritime Decarbonisation
Published: 7 March 2024