Tradewinds – EU ponders state-backed ‘green’ ship funding plan

(Written by Adam Corbett)

27 February 2013 - A chronic lack of funding has led to a new scheme being proposed to help shipbuilding projects survive

A new state-backed funding scheme to promote green ship newbuilding and refitting projects is among a series of wide-ranging proposals under discussion as part of a joint-industry European Commission (EC) initiative to help the shipbuilding industry survive.

A new governmental paper, “New Opportunities for the Future”, published under the Leadership 2020 project, was tabled at the EC last week. It identified the credit crunch as one of the major obstacles to the industry’s prospects.

It claimed lack of funding has become “the single most important factor in competing for international shipbuilding contracts”.

“Sometimes, contracts are being placed based on the availability of finance over the technical competences of the bidder,” the paper said.

To help bridge the funding gap, the paper’s sponsors said they would like to see the European Investment Bank (EIB) play a bigger part in funding environmentally driven newbuilding projects.

The EIB’s main shareholders are the 27 European Union (EU) member states. The bank is largely regarded as the EU Bank.

“The expansion of the scope of lending by the EU should be further explored by the industry to take EIB financing into consideration for projects related to ‘green shipping and retrofitting’,” it said.

European yards and machinery manufacturers said they would also like to see Public Private Partnerships (PPPs) in Europe develop green shipping projects. These could be either non-profit public-works projects or commercial initiatives — but they must be kept within state aid rules.

The industry also proposed that funds raised from either an international or the EU’s so-called market-based measures or emissions-trading schemes to promote a reduction in greenhouse gasses from shipping could be used for what it describes as the “greening of ships”.

Refund guarantees

The paper goes on to call for EU member states to consider helping provide refund guarantees for yards; the lenders are currently unable to provide the support because of the downturn in shipping markets and the credit crunch.

A proposal to provide an EU guarantee scheme has not got off the ground.

The funding proposals are among a series of recommendations that also include “promoting employment and skills, improving market access and fair market conditions, and research, development and innovation”.

Community of European Shipyards Associations (CESA) secretary-general Douwe Cunningham said: “Now is the time to work closely with the EC and other Leadership 2020 stakeholders in order to ensure the recommendations are effectively implemented.”

Industry input into Leadership 2020 came through SeaEurope, which is made up of CESA and the European Marine Equipment Council.