In a nutshell:  The Federal Government grants aid of up to 60% of the additional costs incurred through engine modernisation or pollution reduction measures to ship owners in coastal shipping. Any company based in the Federal Republic of Germany that is the owner of a merchant ship registered in the German ship register and flying an eligible flag is eligible for funding.

The Funding Guideline for the Sustainable Modernisation of Coastal Ships of 18 November 2020 (Federal Gazette AT 14.12.2020 B7) creates an incentive to reduce air pollutants and greenhouse gases and improve the energy efficiency of ocean-going ships. The following measures are eligible for funding:

• Modernisation of engines (for example, by acquiring a lower-emission ship engine or an electronic drive system; and this applies to both existing ships and newbuildings);
• Improvement of energy efficiency;
• Reduction of pollutants emitted from existing ships.

Propulsion systems that run on natural gas (LNG and CNG) are not eligible. The promotion of these systems is covered by a separate promotion programme, about which we will keep you informed.

The funding rate for engine modernisation and emission reduction is set at 40% of eligible expenditure and that for energy efficiency improvement at 30%. Parameters such as the size of the company and the area eligible for funding can also allow for surcharges that lead to an increase in the grant to up to 60% of the costs of the measures.

Any company based in Germany that owns a merchant ship registered in the German ship register and flies an eligible flag is eligible to apply.

A merchant ship for the purposes of the directive is a ocean-going vessel that is used commercially as a cargo or passenger ship or is hired out commercially for this purpose. In addition, it must be able to pass through the Kiel Canal. The maximum dimensions foreseen for this are 235m length, 32.5m width, 40m height and 9.5m draught.

Eligible merchant ships are those flying the federal flag (also on the basis of a flag certificate pursuant to § 11 para. 1 Flaggenrechtsgesetz), the flag of an EU state, Iceland, Liechtenstein, Norway or Switzerland.

The funding programme provides for funding applications to be submitted after a first call until 12 May 2021. The applications, which must be submitted exclusively electronically, undergo a two-stage review process: After a formal review of the application with regard to funding law, business management and technical aspects, the eligibility for funding is examined. In this second step, the applications are put into competition with each other and assessed and prioritised according to two criteria:

• Contribution of the project to the objectives of the NaMKü Directive (60% weighting)
• Share of value added within the EU (40% weighting)

Only projects whose implementation has not begun before the grant is awarded will be funded. After receiving the grant, the recipient is obliged to use the equipment commercially for a period of five years from the date of installation or replacement.

The guideline is limited until 30 June 2024. If necessary, the term may be extended until 31 December 2025. The deadline for receipt of applications after the first call is 12 May 2021. There are to be further funding rounds. However, it is currently not known when this will be.

If you have any further questions, please do not hesitate to contact your contact person at EHLERMANN RINDFLEISCH GADOW or Dr. Stefan Rindfleisch or Hanno Geissler.