Unlocking decarbonisation for near-shore fleets

Andrew Southwood, Marine Finance, Siemens Financial Services UK argues that while strict emissions targets, high capital costs and technology uncertainty pose significant challenges, tailored equipment financing and specialist sector financier can help de-risk investment in short-, medium- and long-term low-carbon solutions, making the green transition commercially viable for SMEs.

Transition deadlines

Since the government released its maritime decarbonisation strategy, the industry is planning around three milestones:

• 30% reduction in greenhouse gas emissions by 2030
• 80% reduction by 2040
• Net-zero emissions by 2050[1]

Speed is therefore key in the industry’s transformation. Unlike past industrial and technological revolutions, the energy transition has a deadline[2], and it is expected to unfold at twice the historical pace – over just one generation.[3]

The scale of investment

Moving at pace comes at a cost. Transitioning to low-carbon technologies demands substantial investment in new vessels, retrofitting existing fleets, and developing supporting infrastructure – a particular challenge for small and medium-sized shipowners.

One report estimates that approximately £75 billion will be required over the next three decades for the UK’s domestic maritime sector to achieve net-zero emissions.[4] To put this figure in context, the size of the marine finance market for UK SMEs is around £2 billion.

Risk factors

Additionally, unlike deep-sea shipping, which has greater economies of scale and access to global fuelling infrastructure, near-shore operations must contend with shorter routes, smaller vessel sizes, and fewer refuelling or recharging options. These factors complicate the choice of decarbonisation pathways.

At the same time, the uncertainty surrounding future fuel options, infrastructure and regulations, makes investment (and therefore lending) more uncertain. In summary, the following factors add up to make funding access challenging for SMEs:

• the scale of investment required
• the increased costs of applying new technology
• the perceived risks associated with emerging technologies
• uncertain returns
• and the existing shortage of marine finance.

Practical solutions

Despite these challenges, decarbonisation cannot be avoided. To feasibly make the transition, the industry therefore needs solutions for the immediate, medium and long term. And to set these solutions in motion, collaborating with financial institutions that understand the industry’s unique challenges can provide a strong safety net.

As vessel operators seek fuel strategies that balance cost, practicality, and emissions reduction, engineering solutions can reduce emissions in the short term. There are a number of technological developments happening (and affordable) right now that the industry can consider. They involve propulsion methods, but also other energy/fuel saving economies.

Near-term engineering solutions

Efficiency through design is probably the easiest way to reduce emissions in the near term. The upfront costs are affordable and some measures, such as weight reduction, can actually be cost beneficial. More efficient vessels use less fuel and therefore save operating costs as well as reducing greenhouse gas emissions.

Secondly, wind-assisted propulsion can make a positive, cost-effective contribution to decarbonisation. The fuel savings (and thus GHG emissions) are proven, the costs involved are affordable, and the pay-back period is comfortably within the equipment useful life.

And thirdly, battery systems remain one of the most scalable short-term solutions for smaller vessels. Near-shore operations where vessels have predictable, short-range routes are currently best-suited for battery technology.

Lack of onshore grid capacity, as well as energy density, weight, and cost remain significant barriers to wider adoption. However, as batteries improve in performance and price, and as infrastructure improves, battery systems will become increasingly viable.

Mainprize partners with Siemens Financial Services to expand offshore wind support  
Mainprize currently operates crew transfer vessels (CTVs) across the North Sea. Proprietary vessel designs means that Mainprize’s CTVs have a unique ability to operate in challenging sea and weather conditions all year round.

To enable the acquisition of new CTVs, Mainprize sought a financing partner who would understand how it operates as well as its growth ambitions. Bob Mainprize, owner of Mainprize Offshore, explains:

“Our business needs specialist financing partners who understand our products, our markets, asset values and applications, and the dynamics of a business like ours. Though the greener CTV market is relatively nascent, SFS needed no explanation on the value of CTVs in supporting offshore wind. Their understanding of new vessel build times, for instance, is reflected in our financing agreement, which offers flexibility on the fund drawdowns. SFS also indicated potential for a future financing arrangement to further expand the fleet and support business growth. The backing of a significant partner such as SFS with the possibility of a longer partnership helped to set them apart from generalist financiers.”

Medium-term engineering solutions

Medium-term options reduce emissions today while providing options for tomorrow. Coming back to battery technologies, for instance, many operators are now exploring hybrid systems that pair traditional diesel engines with battery packs.

These systems enable “silent running” in ports or environmentally sensitive areas and allow peak shaving during high-demand operations. They offer measurable fuel savings and reduced emissions without full electrification^[5] – a flexible ‘bridge technology’.

Other transitional solutions include: diesel-electric propulsion for easier future integration with batteries or fuel cells[6]; using methanol as a marine fuel to reduce emissions without significant changes to vessel design and bunkering infrastructure^[7]; or digital energy management systems that optimise power use across batteries, generators, and propulsion.

Evaluating future fuels

Looking beyond transitional technologies, the maritime sector must eventually adopt zero-carbon fuels to meet long-term climate goals. Several fuels are in development or early-stage deployment. However, each has its own advantages and disadvantages, and no single option currently meets all operational, environmental, and economic needs.

For small and medium commercial vessels – such as workboats, ferries, service craft, and near-shore cargo carriers – the future fuel landscape presents unique opportunities and limitations, which are briefly summarised here:

Assessing lending partners

As well as assessing the range of decarbonising solutions available, UK shipowners also face the task of accessing funding and selecting appropriate partners. The fact that the green transition is being driven by regulation rather than efficiency and cost savings (as is usually the case) has implications for financing access.

Regulation as a driver means the changeover to more environmentally friendly technologies often does not deliver near-term cost savings. In fact, it may deliver less efficiency from an energy density point of view and greater costs.[8] A financing partner must therefore have the appetite to share the risk of sustainable investments.

Green Marine, a leading provider of integrated marine services to the renewable energy and offshore sector, leveraged specialist finance to sustainably invest and meet rising demand. Jason Schofield, Managing Director of Green Marine, shares his experience working with Siemens Financial Services: “They don’t just look at the numbers, they look at the bigger picture – the condition of the vessel, the opportunities it creates, and how it fits into our long-term strategy.”

There are a range of specialist lenders that have the skills and sector knowledge to offer financing that helps owners and operators transition to low emission technology. The trick will be to probe sufficiently to understand which financiers truly have that expertise and can make investments in cleaner propulsion more affordable and cash-flow friendly.

Developing strengths

As the UK Government seeks to place itself at the forefront of maritime decarbonisation[9], UK shipowners are likely to find regulations changing at a faster pace than many other countries. Additionally, organisations client-side are looking to their supplier-partners to contribute to the decarbonisation of the whole supply chain. So low emission vessels may well rapidly become a ‘must have’ to win tenders.

It is not all cause for concern. Though near-shore operators have multiple challenges to consider when planning a low-emission future, there are also opportunities to capture. Their shorter operational ranges may make them better suited for battery technology, hybrid systems, or alternative fuels that are not yet viable for deep-sea applications. This article is a starting point for decarbonisation strategies aimed at seizing these opportunities.

Request your copy of the full framework, “Maritime decarbonisation: A lender’s perspective on navigating change and opportunity” by contacting: specialistfinance.sfs@siemens.com.

Siemens Transform is back for 2026 at Manchester Central on 15 and 16 July. The event brings together thousands of industry participants, to help accelerate digital and sustainability transformation. Register your interest here.

Learn more about vessel and marine financing here.

Notes:

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[1] https://www.gov.uk/government/news/course-charted-for-carbon-free-shipping-by-2050

[2] http://rmi.org/the-energy-transition-is-a-technological-revolution-with-a-deadline/

[3] https://rmi.org/the-energy-transition-is-a-technological-revolution-with-a-deadline/

[4] https://www.marine-capital.co.uk/ukmaritimedecarbonisationreport/

[5] https://www.longitude-engineering.com/news/diesel-electric-battery-hybrid-vessels-is-it-for-every-vessel/

[6] https://oceantimemarine.com/en/blog/2017/06/18/diesel-electric-propulsion-is-this-a-safer-more-efficient-solution-for-your-vessel/

[7] https://north-standard.com/insights-and-resources/resources/news/methanol-as-a-marine-fuel

[8] See, for example:

https://www.forbes.com/sites/feliciajackson/2025/02/27/why-protectionism-could-make-energy-transition-more-expensive/;

https://russellinvestments.com/us/blog/energy-transition-summary-part-2

[9] https://assets.publishing.service.gov.uk/media/5d24a96fe5274a2f9d175693/clean-maritime-plan.pdf