Next Generation EU plan could fund green ships

 Owners looking to build new green ships using energy storage systems, hydrogen fuel cells, LNG, methanol or other alternative fuels could get a funding boost from European Commission’s Covid-19 recovery plan for the EU.

Next Generation EU calls for a €750Bn (US$833Bn) funding mechanism consisting of €500Bn (US$555Bn) for grants and €250Bn (US$278Bn) for loans for 2021-2027, citing shipbuilding “as a priority segment for the investments envisaged in the recovery plan.”

European Commission president Ursula von der Leyen said “The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalisation will boost jobs and growth, the resilience of our societies and the health of our environment.”

Italy’s national shipbuilding association Assonave was enthused by the recognition of shipbuilding and the possibility of funding to underpin the development and construction of green ships.

“In its communication to the European Parliament, European Council, Council of the European Union, and the Committee of Regions, the European Commission acknowledges that, especially in this period of health emergency, the transportation industry has played an essential role in value chains, Assonave said in a statement. “It also acknowledges that to create new jobs, it is essential to boost the production and use not only of motor vehicles but also sustainable ships.”

Assonave member shipyards, marine equipment and component suppliers, and research firms account for about 40,000 jobs and a manufacturing output of about €8Bn (US$8.89Bn) in Italy – most in the form of exports.

Italy’s population was particularly hit hard by the coronavirus pandemic and its manufacturing base disrupted. Trieste-headquartered Fincantieri, one of the world’s largest shipbuilding groups, has gradually resumed production activities on 20 April after more than a month-long shutdown in all Italian shipyards and production plants. Production at Fincantieri’s Italian shipyards was down 20% year-on-year in Q1.

Overall, the Fincantieri Group has a backlog of €31.9Bn (US$35.4Bn), 5.5 times its 2019 revenues, with 92 ships on order, including many from the world’s largest cruise ship companies.

Commenting on Next Generation EU, Italy’s national shipbuilding association Assonave president Vincenzo Petrone noted “This plan has two main goals. The first is to boost the production and use of modern, environmentally sustainable ships, with relevant positive effects in terms of job creation and mobility. The second goal is to make up the deficit of investments needed to accelerate the ‘green’ transition of European ships to account for the challenging environmental protection objectives that Europe intends to achieve by 2030.”

In its recovery plan, noted Assonave, the European Commission also proposes to reinforce programmes such as the European Maritime and Fisheries Fund, the Connecting Europe Facility fund and the European Defence Fund. Lastly, the documentation attached to the above-mentioned communication mentions a sectoral distribution of the gaps that will have to be filled by annual €20Bn (US$22Bn) investments aimed at achieving the green transition of vehicles, rolling stock, ships and aircraft.

The New Generation EU is not only be good news for Italian shipyards, but also other European shipbuilders in the 27 member states.

Added Mr Petrone, “If streamlined and properly financed, the recovery plan can become an efficient means to achieve the growth objectives the European shipbuilding industry has set for itself in the challenge against the tough Asian industry.”