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Third funding call published in relation to the LNG Directive

By 27. April 2021April 28th, 2021No Comments

Third funding call published in relation to the LNG Directive

27 April 2021

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.

Your contact person:

Dr. Stefan Rindfleisch
Dr. Stefan Rindfleisch
rindfleisch@​erg-​legal.​com