Teekay Shuttle Tankers has placed US$125M of unsecured green bonds with fixed income investors following roadshows in Bergen, Helsinki, Stockholm and Oslo. The US$125M will contribute to the cost of the LNG-powered VOC recovery system E-Shuttle tankers. In return, the investors will receive tax breaks for investing in environmental developments
The E-Shuttle tankers Aurora Spirit, Rainbow Spirit, Tide Spirit and Current Spirit are currently under construction at Samsung, which also built the dual-fuel dynamic positioning shuttle tankers for AET. The Teekay E-Shuttle tankers will operate on both liquefied natural gas (LNG) as the primary fuel, and a mixture of LNG and recovered volatile organic compounds (VOCs) as secondary fuel.
Technology on board the ships removes up to 100% of VOC emissions, according to manufacturer-supplier Wärtsilä. The VOC recovery system converts VOC emissions into liquid gas, feeding the gas into a secondary fuel tank on board the vessels, reducing annual fuel bunkering by up to 3,000 tonnes, according to the manufacturer.
The E-Shuttle tankers will operate in the Norwegian sector of the North Sea and the vessels’ technology and environmental credentials qualify the E-Shuttle tankers for a range of Norwegian government incentives totalling US$180M.
The green bonds also carry a Norwegian Government incentive in the form of tax savings for investors funding green technology. Teekay Shuttle Tankers mandated Danske Bank, DNB Markets, Nordea and Skandinaviska Enskilda Banken to arrange the senior unsecured green bond, which have a green second opinion from CICERO and received a CICERO Light Green shading.
CICERO is a research institute that provides independent environmental assessments of green and sustainable bond frameworks and the issuer’s relevant internal governance procedures. There are four CICERO ratings: Brown (lowest rating), Light Green, Medium Green, Dark Green (highest rating). The Teekay E-Shuttle tankers achieve a Light Green rating due to Teekay replacing older tankers with better environmental tankers. Specific technologies that achieved the Light Green rating were:
The Teekay Shuttle Tankers’ green bond was unable to achieve a higher CICERO rating as the shuttle tankers will be transporting carbon-producing crude oil: “…each vessel transports an estimated 23.5M barrels of crude oil annually with associated emissions of 9.4M tonnes of CO2 – more than the total emissions from road traffic in Norway in 2018.”
Another concern (or “pitfall” as termed by CICERO) is that the vessels are constructed without the builder (Samsung) being subject to climate and environmental standards, but it did note that there was a limit on which builders could actually undertake to build such technologically advanced vessels. It also noted that Teekay does not have in place its own emissions reduction policy.
Teekay is one of the nominees for the Environmental Award for its quiet tanker initiative. Voting is now open for the Tanker Shipping & Trade Awards. Place your vote for all nominees here.
The Awards are an integral part of the 2019 Tanker Shipping & Trade Conference, Awards, & Exhibition. Book your place at this year’s event to be held in London on 26-27 November 2019.