CAF highlights the role of financial institutions in supporting maritime and port decarbonization projects

CAF -development bank of Latin America and the Caribbean participated in the Regional Workshop "The Role of the Banking Sector in Maritime Decarbonization: Challenges and Opportunities" through a presentation by Fausto Arroyo, Principal Executive of the Regional Integration Directorate. He outlined three main points: First, the high impact of the maritime transport and port sector on regional development; second, the key concepts for banks and financiers; and third, the projects that concern maritime and port managers.

Arroyo stated, "Financiers are expected to be involved in the implementation of maritime and port sustainability. The sector is starting to prepare, so we need dialogue to understand who the financiers are and for financiers to start speaking the language of implementers".

Regarding key concepts for banks and financiers, the CAF expert began by clarifying that the integration of maritime, port, and logistics sectors is public-private (PPP); meaning, "the public sector sets a legal framework, a playing field. Behind it come major infrastructures, which are private investments, and then all the services, which are also private". Here, the specialist outlined elements that hinder projects: a committed long-term public policy; a PPP legal framework that inspires confidence in the local banking sector, because despite multilateral financing, the experience is that PPPs and private investments do not move forward without a local banking sector that understands PPPs and is committed to the model.

He advocated for the efficient articulation of multiple participants, both public and private; analyzing the availability of a sufficient ecosystem of companies to support the planned investment (not just an isolated investment from one company); he called for agile and smooth electronic administration that allows all exchanges, the positioning of digital business platforms, and the need to maintain specific additional training and constant updates for workers.

He warned about the challenge of orderly institutional frameworks, "an absolutely critical point we find in the region. Implementation is not possible without coordination. On one hand, with public licenses, we talk about sustainability, but sometimes it’s dramatic how the timelines flow with environmental licenses, and that is key for an investor. You can't work with indefinite timelines. The financial resource is here and now, defined and not a promise for the future".

Arroyo highlighted an extremely important element: "The region is on the verge of massive port concession renewals, and this can be seen as a threat, but also as a great opportunity to introduce sustainability elements. It is crucial to guide this process well; it will require high participation from the financial sector and a future-oriented approach that includes sustainability, not just demands".

"The high environmental impact requires incorporating the part of the organization responsible for sustainability, a crucial element in the risk matrix. Concepts like decarbonization and energy transition need to be managed both internally and externally in the port. Ports are generators: When a ship is in port, it keeps a power generator running. There is an increasing demand to connect it to shore power, so the energy transition is becoming a big question", he asserted.

He also highlighted the results of the CAF survey conducted in 2023 about the projects that concern maritime and port managers. While he acknowledged that categories like Sustainability and Environment (which concerns 32%), Social Aspects like security (31%) and city-territory (23%), and Diversity, Inclusion, and Gender Equity (16%) are among the lowest, he said, "this should not be a source of frustration, as these are projects that did not appear in the previous survey (from five years ago). There is a growing concern not only in society and international organizations but also among port managers who are starting to place these projects on their agendas".

After his presentation, Arroyo participated in Panel 2: "Role of Financial Institutions in Supporting Maritime and Port Decarbonization Projects", moderated by José Digerónimo, president of the Panama Maritime Chamber, and also included Carla Chízmar from the Inter-American Investment Corporation (Cifi) and Manuel Batista from the Latin American Stock Exchange (Latinex).

The CAF mission was led by the bank's representative in Panama, Lucía Meza, and included Rebeca Vidal, Principal Executive of the Technical and Sectoral Analysis Directorate; Sergio Avilés, Principal Executive of the Panama Office; and Mauricio Reves, Senior Executive of the Operations Management Directorate with the Financial Sector.

The Regional Workshop "The Role of the Banking Sector in Maritime Decarbonization: Challenges and Opportunities", was organized by the Maritime Technology Cooperation Center (MTCC) in collaboration with the International Maritime Organization (IMO), Mercantil Bank, the Institute of The Americas, and the International Maritime University of Panama (UMIP).