First Use of Transition Loan in Japan, Selected as Model for METI Climate Transition Finance
Tokyo - September 09, 2021
The Development Bank of Japan Inc. (DBJ; President & CEO: Hajime Watanabe; Head Office: Chiyoda-ku, Tokyo) and Sumitomo Mitsui Trust Bank, Limited (SMTB; President: Kazuya Oyama; Head Office: Chiyoda-ku, Tokyo) served as the arrangers and Sumitomo Mitsui Banking Corporation (SMBC) as the co-arranger. Ontop of the three banks, this Transition Loan was jointly provided by 10 local financial institutions located mainly in Western Japan, near the routes on which the two ferries will be launched, and close to the shipyards where they will be built.It was selected as the first transition loan in Japan for the Ministry of Economy, Trade and Industry (METI)'s climate transition model projects. (Note 2)
Eligibility for the loan received third-party evaluation by the Japan Credit Rating Agency, as the loan conforms to the Climate Transition Finance handbook published by the International Capital market Association (ICMA) and the Green Loan Principles (GLP) developed by experienced working groups such as the Green Bond Principles (GBP) of the International Capital Market Association. (Note 3)
The two vessels are Japan's first LNG-fueled ferries (Note 4), which will be operated on the Osaka-Beppu route by MOL Group company Ferry Sunflower Limited (President: Mitsujiro Akasaka: Head Office: Oita-shi, Oita Prefecture), and slated for launching in succession from the end of 2022 to early 2023.
LNG, which will be used as fuel on the ferries, is expected to reduce the vessels' emissions of carbon dioxide (CO2) by more than 20%, sulfur oxides (SOx) by 100%, and nitrogen oxides (NOx) by about 85% compared to conventional fuel oil vessels. The ferries have also earned the top rating of five stars from the Japanese Ministry of Land, Infrastructure, Transport and Tourism (MLIT)'s energy conservation rating system for coastal ships. These vessels are also expected to contribute to a modal shift in Japan in addition to playing a key role in a critical maritime infrastructure that supports the movement of people and commodities in Western Japan.
The MOL Group established the MOL Group Environmental Vision 2.1 in June 2021 with the aim of achieving net zero GHG emissions by 2050 (Note 5). It plans to launch about 90 LNG-fueled vessels by 2030, as an "introduction of clean alternative fuels" (Fig. 1) to realize this vision. It continually strives to contribute the development of a through concerted group-wide efforts.
Image by MOL
[Outline of Syndicated Transition Finance
Transition Loan is a commitment line with the purpose of supporting corporations that engage in reduction of greenhouse (GHG) gases in line with long-term transition strategies to realize a de-carbonization society as set out in the goals of the Paris Agreement
Please refer to the Japanese Ministry of Land, Infrastructure, Transport and Tourism (MLIT) website.
Please refer to the Japan Credit Rating Agency website.
Please refer to the press release:
March 29, 2021: MOL, Kyushu Electric Power Sign Basic Agreement for LNG Fuel Supply for Japan's First LNG-Fueled Ferries: Sunflower Kurenai and Sunflower Murasaki
MOL Group Environmental Vision 2.1
MOL Group Environmental Vision 2.1
About Mitsui O.S.K. Lines, Ltd. (MOL)
MOL is a multimodal corporate group that meets the needs of the times in a wide variety of fields such as various types of bulk carriers, crude oil tankers, LNG carriers, offshore businesses, methanol tankers, chemical tankers, product tankers, car carriers, ferries, and RORO ships. It develops various social infrastructure businesses, mainly in the ocean shipping industry, based on one of the world's largest fleet and accumulated experiences in nearly 130 years. It addresses changing social needs including environmental conservation with technologies and services to contribute to growth of the world economy.
About the Development Bank of Japan (DBJ)
DBJ takes a proactive stance in customers' efforts on realization of sustainability management and vitalization of local economies, based on the corporate principle "Design the future with financial expertise: Continue to expand financial frontiers; Provide the best solutions for customers and society; Pursue sustainable development for Japan and the world."
About Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Trust Bank sets forth its reason for existence (Purpose): "Creating new value with the power of trust and let a prosperous future for our clients and society bloom," and support customers' efforts on sustainable growth and development of society by steadily carrying forward initiatives to address various social issues.
About Sumitomo Mitsui Banking Corporation
SMBC Group has established "SMBC Group GREEN x GLOBE 2030," a ten-year plan that extends to 2030 and is based upon the "SMBC Group Sustainability Statement" under the basic concept "Create the future of the earth and humanity with our customers." It works toward sustainability with customers under the commitment of top management.
Mitsui O.S.K. Lines, Ltd. press release