In a recent report, Ishka SAVi examined fuel-burn and emissions-reduction retrofit options for in-service commercial aircraft. For many of these solutions, a key barrier to wider adoption has long been their financial viability: do the near- to medium-term efficiency gains justify the upfront investment?
This conundrum is not unique to aviation. In shipping, where a greater range of emissions-saving technology retrofit options exists, a pioneering fund was launched at the end of 2025 to address the challenge. The Fund for Energy Efficiency Technologies (FEET) provides up to 100% upfront financing for vessel retrofits and introduces a pay-as-you-save repayment mechanism linked directly to verified fuel and regulatory savings. The fund is anchored by the non-profit Global Centre for Maritime Decarbonisation (GCMD) and managed by AIM Horizon Investments, a Singapore-based transportation-focused asset manager formerly known as FPG AIM Capital.
Derisking shipping vessel retrofits
In the past two decades, shipping has seen a proliferation of technologies designed to lower fuel burn, filter out harmful emissions, or capture carbon. While for aircraft efficiency retrofits often go unnoticed to the casual observer, some of the most visible innovations for ships are quite literally the opposite, from large wind-assist rotor sails to exhaust gas capture systems. They also come with markedly higher emissions reduction potential, from up to 25% for wind-assist propulsion systems (WAPS) to 70% for onboard carbon capture.
Among these, the benefits of energy efficiency technologies (EETs) – such as WAPS, or air lubrication systems (ALS), which pump bubbles beneath the hull to enable the vessel to move more smoothly through the water – are yet to be fully understood, as operational and environmental factors impede an accurate understanding of their benefits. Given the significant capital requirements, typically ranging from $2 million to $5 million per vessel, accurately measuring the energy savings is key to greater uptake.
To shed light on their contribution, GCMD has undertaken EET performance pilots, equipping vessels with additional sensors to acquire data and applying rigorous analytics to quantify fuel savings with statistical confidence. These verified fuel (and often also regulatory, such as EU ETS) savings are quantified, and with this new fund, the savings can now be linked to the repayments by ship owners with FEET-funded retrofits – offered in unsecured leases with a pay-as-you-save repayment system.
“For any decarbonisation solution to be scalable, it has to be economically viable for its users, you can’t rely on their goodwill,” explains Fintan Smyth, non-executive director at AIM Horizon Investments.
Starting point: up to $35m and 7 to 10 deals
Alongside AIM Horizon Investments as fund manager and the technical advisory of GCMD – whose catalytic equity creates a first-loss layer – the Development Bank of Japan (DBJ) holds the preferred equity position, and DBS Bank and ING (which acted as coordinating bank) have in principle agreed to provide senior debt financing. The $35 million should be enough to cover approximately seven to 10 ship modifications across different technologies, manufacturers, and shipping companies. The expectation, Smyth says, is that the initial portfolio of deals will enable the pay-as-you-save methodology to be refined and show how the risk-sharing makes FEET leases economically attractive for the shipping companies, enabling a larger fund with more investors and greater diversification benefits to follow – possibly as early as next year.
Unlike aviation – where large commercial assets are highly standardised and dominated by a handful of OEMs – shipping assets are far more heterogeneous in design and technology. As a result, each ship has its own characteristics and, for those that contain more than one fuel-saving technology, isolating the benefits of each one in an operational context is challenging. For this reason, FEET focuses on EET retrofits that can be “turned on and off” allowing easier and more accurate monitoring of their efficiency contribution. The shipping retrofit market for EET devices is also vast, the fund partners estimate, at over $20 billion.
Could the same be done in aviation?
Among the fuel-saving retrofit options available for in-service aircraft, few deliver savings above 5%, while their unit cost and installation are, in most cases, considerably lower. This makes aviation more challenging for an equivalent FEET fund in both resulting savings (and thus repayment), and capital deployment – although not impossible. A hypothetical bundle of efficiency retrofits that, in aggregate, can reduce fuel burn per aircraft beyond 5% could become a workable pay-as-you-save leasing product.
However, Smyth believes that the blended finance fund structure – particularly the use of in-sector catalytic capital – has greater potential to derisk other aviation decarbonisation investments, such as SAF projects. Catalytic capital, he says, provides a buffer that helps crowd in larger pools of private capital, including bank financing. In the aviation sector, industry stakeholders with technical expertise – and, in the case of airlines, long-term SAF demand – could become the right partners.
The Ishka View
The recently created FEET fund for vessel retrofits provides a new reference point for financial innovation aimed at aviation decarbonisation. As Ishka SAVi’s recent review of optional retrofit solutions highlights, innovation is ongoing across both aerodynamic improvements and technologies such as eTaxi, with the potential to generate meaningful fuel and emissions savings for airlines operating certain aircraft types and flight profiles. Much like in shipping, while asset-based financing in aviation benefits from the risk mitigants associated with movable assets, retrofits are in many cases not easily separable from the installed asset and therefore offer limited standalone collateral value. However, with the right choice of counterparties, a diversified portfolio of retrofit investments, and repayment periods that are shorter than those of most long-term aircraft leases to compensate for potential non-payment risks, dedicated financing structures could nevertheless help accelerate the deployment of such technologies.
The other way in which FEET creates an important reference for aviation is through the possibility of adopting a similar approach to support SAF financing. In particular, the fund demonstrates the potential of combining catalytic capital – in the form of a lower-return, first-loss layer – with senior bank debt. At this stage, among the aviation sustainability funds examined by Ishka SAVi, none has followed this exact structure.
