Modernisation of coasters and inland waterway vessels

Study to develop proposals to incentivise a sustainable modernisation of coaster and inland waterway vessels.

 

In summer 2019, the German Maritime Centre commissioned a study to develop proposals for the future promotion of a sustainable modernisation of short-sea shipping and inland waterway transportation (development of draft guidelines). The aim is to identify economically and environmentally effective incentives for shipping companies to modernise their ships in a way that protects the climate and the environment.

Short summary

Starting situation

Modernising the engines of inland waterway vessels and coaster makes sense in terms of environmental policy, but often not in terms of an operator’s bottom line. In order to motivate operators of inland waterway vessels to install cleaner engines than they are legally required to, the Federal Ministry of Transport and Digital Infrastructure (BMVI) has been funding targeted measures since 2007. There is no comparable programme for coastal shipping to date.

Objective

The aim of the study is to identify economically and environmentally effective incentives for shipping companies to modernise their ships in a way that protects the climate and the environment. To this end, it will build on previous experience with funding instruments in inland shipping and, for the first time, will also make funding proposals for coastal shipping. In addition to the technical and economic aspects, it will also examine the legal framework for subsidies.

The results are intended to support the BMVI in drawing up new guidelines (valid from 2021) to incentivise the sustainable modernisation of inland waterway vessels and in developing similar funding guidelines for coastal vessels.

Results

In order to ensure a high practical relevance, experts from inland and coastal shipping were interviewed. The results of the discussions were incorporated into the study.

Inland shipping
The existing funding programme was modified several times and adapted with regard to the objects and conditions of the funding. The programme will run out at the end of 2020 and new guidelines will be required. From the point of view of the assessor, the following points should be included or taken into account when drafting new guidelines:

  • The funding for energy consulting should be increased. The Federal Ministry of Economics and Energy (BMWi) does not currently allow this funding for shipping, as there are no recognised energy consultants for shipping.
  • Increases in energy efficiency should be promoted as a whole, since measures such as optimisation of the rear ship, flow-optimised coupling points in coupling units or optimisation of the propeller system significantly reduce energy consumption.
  • The measures to increase energy efficiency should also include telematics systems, which have an influence on fuel consumption. Telematics systems have not yet been the subject of funding but should be included in the notifying guidelines according to the proposal. Heat exchangers should also be considered for funding in the field of energy efficiency improvement. The lost heat from the engines could, for example, be used to heat the living areas and to provide hot water.
  • Measures to reduce noise emissions are already covered by the 2020 guidelines and should continue to be funded.
  • Funding for liquefied natural gas (LNG), compressed natural gas (CNG) and liquefied petroleum gas (LPG) as well as gas-to-liquids (GTL) technology should be included.
  • Electric and hybrid engines should be eligible.
  • The installation of low-emission NRE or truck engines should be included in the new guidelines. This has already been done in the 2020 guidelines, but with restrictions: At present, only engines that fall below at least one of the applicable threshold values by 5% are eligible. The benchmark here, however, should be the undercutting of the limit values from the Non-Road Mobile Machinery Directive for IWP and IWA engines.
  • The installation of low-emission diesel engines should be incentivised, as is already the case in the guidelines for 2020. However, promoting low-emission diesel engines exclusively in conjunction with exhaust gas treatment systems would disadvantage diesel engines that fall below the limit values without exhaust gas treatment systems.
  • Pollution reduction measures should be incentivised. Exhaust gas treatment systems (including SCR, particulate filters) are of primary relevance here, but fuel/water emulsion systems or water injection systems are also conceivable.

The basis for decisions on funding should be the economic benefit of a measure in relation to its economic costs.

Short sea shipping
The study developed a proposal for the definition of coastal navigation: It recommends defining a coastal vessel by its dimensions. For the purposes of a funding programme, coasters should be understood as vessels with the maximum permissible dimensions for passage through the Kiel Canal.

Eligible vessels should therefore be:

  • Merchant vessels used for the commercial transport of goods or passengers by sea or commercially leased out for this purpose, as well as cable-laying, dredging and towing vessels owned by the shipping company or leased or bareboat chartered to it;
  • Ships which are entered in a German shipping register and
  • Fly an EU flag or the flag of Iceland, Liechtenstein, Norway or Switzerland, or
  • Fly the German federal flag on the basis of a flag licence in accordance with §11(1) of the Flag Law.

Further conditions should be attached to the funding:

  • As is also the case for inland shipping, a two-year earmarking period is proposed.
  • A value-added clause should be inserted to ensure that the added value of the measure is generated within the EU and to prevent investment from being carried out outside the EU.
  • Only companies that are not in economic difficulties are eligible. It is recommended that companies with a positive liquidity forecast would not be considered to be in difficulty.

For short sea shipping, the nitrogen oxide limits of IMO Tier III and the MARPOL regulations on energy efficiency are proposed for determining the limit values to be complied with or undercut. Hence, meeting or undercutting the reference value would lead to funding eligibility.

The assessor proposes similar measures for the eligibility of short sea shipping vessels as already exist in inland shipping. As applies in the case of inland shipping, all measures whose economic benefits exceed the costs of the measure should in principle be eligible for funding.

A draft for a possible guideline document for the promotion of short sea shipping was drawn up as part of the study (see from page 58 onwards).

The complete study (only in German) is available here: https://www.dmz-maritim.de/service/downloadbereich-mediathek/#studien

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