2024-01-22 23:23:00
Ioannis Voutsinos* 22.01.2024 • 23:23
THE shipping is undoubtedly one of the most important sectors of the European and world economy. According to the annual report of the United Nations Organization for Trade and Development, more than 80% of the volume of world trade is carried by sea, while in the next five years the estimate is that this percentage will increase. Concerning greenhouse gas emissionsshipping is responsible for 3% of the planet’s emissions, with estimates predicting an increase in the percentage in the coming years.
Focusing on the transport sector in Europe, 13.5% of greenhouse gas emissions come from maritime transport. With the aim of reducing greenhouse gas emissions, the International Maritime Organization (IMO) has set the goal of the complete decarbonization of maritime transport by 2050. Accordingly, for the same year, the goal of The European Union through EU Green Deal is a 90% reduction in emissions compared to 1990 levels. It therefore becomes a top priority to reduce greenhouse gas emissions, which is perhaps the biggest challenge facing shipping in the coming years.
Aiming at the decarbonisation of maritime transport, the EU includes shipping from January 2024 to YOU ARE (Emissions Trading System, the trading system of greenhouse gas emissions). Through this system, shipping companies are required to pay a type of fine (through the trading of so-called EU Allowances – EUAs) for the amounts of greenhouse gases emitted by their fleet.
At the same time, however, with the inclusion of shipping in the EU ETS, the shipping industry is also included in one of the largest financial tools of the EU, the Innovation Fund. This program is funded directly from EU ETS revenues, thus enabling shipping companies to get back a part of the money they spent on purchasing EUAs. The Innovation Fund finances, in the form of grants rather than loans, innovative technologies that contribute to the reduction of greenhouse gas emissions from maritime transport. This grant may concern the following categories:
The installation of innovative technologies on ships (either in new ships or in the context of retrofitting existing ships) that increase energy efficiency and reduce the ships’ greenhouse gas emissions. Examples of such technologies are: carbon capture systems to capture CO2 emissions, wind propulsion systems, the use of sustainable alternative fuels, including green hydrogenas well as innovative designs of the ship’s hull or rudder.
The creation of infrastructure in ports to promote the above technologies to reduce ship emissions, but also to reduce the environmental footprint of ports. An example of such technologies is the creation of infrastructure to refuel ships with alternative fuels or to recharge electric ship batteries, as well as the use of renewable energy sources in port operations. Finally, the creation of industrial production facilities for all the above technologies is also an eligible expenditure.
With the new data, as they are shaped by the objectives set by the European Union, companies operating in the shipping sector now have a great opportunity to finance investments that lead to decarbonisation and innovation, raising funds through the Innovation Fund, a new, but very important financial tool directly from the European Union.
*Mr. Ioannis Voutsinos is Managing Director, Head EU Affairs & Funding at PwC Greece.
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