In a nutshell:  The German government promotes the use of LNG in German shipping. If seagoing vessels are equipped with propulsion systems for the use of LNG, eligible applicants can receive funding of up to 60% of the additional costs incurred by the conversion or equipment. The maximum funding amount is EUR 8 million per equipment or conversion project. The application must be submitted by 12 June 2021 at the latest. A requirement for funding is, among other things, that the operation of the subsidized innovative technology constitutes a verifiable environmental advantage compared to the operation of conventional technology.

On 9 April 2021, the third funding call (see German wording of the funding call here) for the “Directive on funding for the equipment and conversion of seagoing vessels for the use of LNG as marine fuel” of 2 December 2020 (see German wording of the directive here) was published. The aim of the directive is to promote the use of LNG in German shipping. The increased use of LNG is intended to realize benefits for climate, environmental and health protection and, in particular, to reduce emissions of air pollutants. At the same time, an incentive is to be created for the further development of the LNG bunkering infrastructure.

Funding is provided for:

(1) Equipment of new seagoing vessels with propulsion systems for the use of LNG as a marine fuel in pure gas or dual-fuel operation for the main propulsion system;
(2) Conversion and replacement of conventional diesel engines on board of existing seagoing vessels to use LNG as a marine fuel in gas-only or dual-fuel operation for main propulsion;
(3) Equipment or conversion of auxiliary engines, provided that the main propulsion equipment or conversion is funded under item (1) or (2);
(4) Complementary systems to further reduce greenhouse gas and air pollutant emissions within a project if they are directly related to the LNG operation or dual-fuel operation of an seagoing vessel and there is otherwise no regulatory requirement for their use.

Only engines that comply with the nitrogen oxide requirements of Class Tier III according to MARPOL Annex VI are eligible for funding. A list of non-eligible expenses can be found in the funding call (see German wording of the funding call here).

The funding is granted in the form of a non-repayable investment subsidy. It is calculated based on the additional investment expenses required for the use of LNG as a marine fuel. As a basic principle, the funding ratio is 40% of the eligible expenses. The grant rate is increased by 20 percentage points in the case of grants for small companies and by 10 percentage points in the case of grants for medium-sized companies. Which companies qualify as ‘small’ or ‘medium’ is based on certain thresholds as recommended by the EU Commission.

Under the third funding call, the maximum grant amount is EUR 8 million per equipment or conversion project.

Eligible to apply are companies and economically operating natural persons resident in Germany who are owners of a seagoing vessel that is to be converted, as well as companies and economically operating natural persons resident in Germany who are planning the construction of a new seagoing vessel. The ship must be one that is verifiably registered in a German shipping register or is to be registered in such a register. The ship must fly the flag of a member state of the European Union, Iceland, Liechtenstein, Norway or Switzerland and be used commercially or within the scope of public duties for maritime navigation, in particular in European waters. In the case of a new construction, the person entitled to the grant must use the ship as the ship owner. A list of applicants excluded from funding can be found in the directive for the “Directive on funding for the equipment and conversion of seagoing vessels for the use of LNG as marine fuel” of 2 December 2020 (see German wording of the directive here).

European waters in the sense of the third funding call are all waters of European states, ranging from their internal waters, through their coastal seas, to their waters within the respective exclusive economic zones (EEZ). In the case of funding, there is an eight-year earmarking period. During this period, the seagoing vessel to be equipped or converted must be used with LNG as marine fuel for at least 15% of the expected operating times in European waters.

According to the third funding call, the application documents must be submitted electronically and in part by mail to the Federal Office for Administrative Services (BAV) as the responsible funding authority by 12 June 2021 at the latest. Detailed project information must be submitted to the BAV in order to assess the formal requirements as well as eligibility and worthiness for funding. Essentially, an application consists of the following application documents:

• Application for a grant on an expense basis;
• Project description and attachments belonging to the project description;
• Documents marked as mandatory attachments.

A separate application must be submitted for each seagoing vessel to be equipped or converted. Following the application, a two-stage approval procedure takes place, in which the eligibility for funding is determined in a first step and the worthiness for funding in a second step.

Funding is only provided for projects whose implementation has not begun before the funding is approved.

The project should be started within six months after the notification of the approval. Conversion projects should be completed within two years and new construction projects within three years after the notification of the approval. Upon project completion, quantitative and/or qualitative effects of the projects must be demonstrated.

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