Finance for sustainability in the UAE

Bilal Hasan Ashraf, head of energy and marine at National Bank of Fujairah (NBF), talks to The Energy Year about how the UAE’s banking sector has navigated the recent economic turmoil, as well as the bank’s support for sustainability in the energy and marine sectors. NBF offers corporate and commercial banking, treasury and trade finance services, personal banking and sharia-compliant services.

How has the banking sector in the UAE navigated the economic turmoil of recent years?
The UAE’s Central Bank has been very supportive of banks and has provided assistance regarding the liquidity issues they were facing. With macroeconomic challenges softening, we see markets on the rise, and with that a considerable improvement of the banking sector.
Certain structural changes have been made. We see a notable increase in monitoring from the Central Bank, tackling problems related to transparency and risk. UAE regulators have been proactive throughout this period and this has positively impacted the industry, especially by accentuating the importance of KYC [know your customer] and AML [anti-money laundering] procedures. It is now very clear what the requirements are for the industry.
We have witnessed a certain retraction of international players during this difficult period. In contrast, we have been active in the market since 1982 and value solid and long-term business relationships, which is why we are well positioned in the UAE.

How does the sector balance the need to secure funding for traditional energy projects with supporting the emerging sustainable energy sector?
It is well known that we will not achieve independence from hydrocarbons in the next few decades. In fact, the energy transition will be fuelled by the traditional oil and gas sector providing energy security and reliability as we build the new energy system to meet the increasing energy demand of a growing population.
NBF in particular has always been strong in energy finance and we continue to support energy security through traditional energy projects, while also ensuring we don’t compromise on energy sustainability. The renewables sector is expanding rapidly thanks to the framework laid out by the government and we are actively supporting these projects, as you will see from our recent partnerships with Yellow Door Energy and CleanMax to finance distributed solar generation projects in Dubai.
Also, another point to add is that as we continue to fund traditional energy projects, we push companies to minimise their carbon footprint – and TCO2e [tonnes of CO2 equivalent] per oil barrel is an important metric to evaluate energy projects.
We are also looking at new technologies that will support decarbonisation of the energy sector’s emissions, like carbon capture, hydrogen and hybridisation in the marine sector. But up until now, we have been in the discussion stage, and we now have to methodically assess the potential costs, economic risks and benefits of these technologies in the longer term with international regulations such as the IMO playing an important role in setting forth the economic principles and policies.

What steps is NBF taking to foster more environmentally friendly practices?
NBF aims to help protect the planet by reducing its carbon footprint across its operations and product portfolio, in line with national and international practices. As part of this, the bank carries out an annual test of air quality across all its locations, and takes remedial measures to rectify any issues identified.
NBF is aligning with the UAE Energy Strategy 2050 in implementing the transformation of the national economy into green activities, to meet the country’s economic requirements and environmental goals. The bank measures its total energy consumption and implemented a number of significant initiatives in 2022 to reduce energy use and increase energy efficiency, including installing solar water heaters, setting timers for water heaters, installing motion sensor-operated lights, providing a solution for Jebel Ali chillers, a chilled water system and smart energy meters.
We have also installed tap aerators to reduce water consumption, and all new building projects will use sensor water taps for more efficient water use.
NBF seeks to apply best practices in waste reduction and the preservation of natural resources.
We have started working with KPIs in terms of ESG-compliant financing and service provision.

What strategies can be deployed in the short term to reduce the marine sector’s emissions?
Since 2020, the IMO has capped the sulphur content of marine fuel at 0.5%. As all vessels move towards that goal, we will see improvement in emissions reduction. Here in the UAE, we already see companies blending fuel with 0.1% sulphur content, which may become the norm in the future. Therefore, cleaner fuels will have a substantial impact on emissions. Low-sulphur fuels such as marine gas oil (MGO) and marine diesel oil (MDO) emit fewer pollutants. Promoting the use of cleaner fuels such as LNG and biofuels can further reduce greenhouse gas emissions.
Technology is also driving reductions in the marine carbon footprint. For example, there are certain silicone coatings that can be applied on ships in order to reduce friction through the water and improve efficiency, as well as small propellers that can add up to 15% to vessels’ fuel efficiency. Therefore, enhancing the energy efficiency of ships can significantly reduce emissions. Strategies include optimising hull design and reducing weight. Ship operators can also adopt measures like slow steaming (reducing speed) and weather touring (optimising routes based on weather conditions) to improve fuel efficiency.
Optimising port operations can also reduce emissions by minimising vessel waiting times and congestion. Efficient management of shipping movements, better co-ordination with ports and implementing advanced technologies for cargo handling can lead to reduced fuel consumption and emissions.
Lastly, digitalisation will have a great impact on analysing data and optimising processes.
The key to reducing the marine sector’s impact is in small incremental changes that can add up to the desired outcome. Initiatives need to be introduced via regulators and discussed with all the stakeholders as well as through an effort to channel investment, which we are proud to be part of.

In what ways has NBF supported the development of Fujairah into a leading trading and bunkering hub?
Fujairah lies at the heart of our activities. As a bank we have been involved in the development of the local economy and helped build a resilient marine sector over the years. From financing local malls and luxury hotels to improve tourism in the area, to playing a key role in the growth and development of Fujairah ports, NBF has been at the forefront of driving the vision of Fujairah as a bunkering, trading and storage hub in the region.

How is NBF positioned for future expansion and other opportunities?
In the past, NBF’s success has been built on long-term relationships, strong teams acutely aware of local markets and our organisation’s flexibility and drive for innovation. We are a local bank with an international outlook.
The future of banking now is being driven by advancement in technology, changing customer preferences, new collaborations, and increasing regulatory requirements.
With respect to customer preference and new collaborations, we are uniquely placed due to our long-standing relationships with clients. We are expanding into renewables while also reviewing possibilities for sustainable aviation fuels, hydrogen, carbon capture and hybridisation – both locally and internationally.

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