Estonia offers €25 million aid for green ship retrofits

The Estonian government has launched a €25 million ($28.5 million) grant scheme to subsidise the retrofitting of existing vessels to operate on alternative bunker fuels.

PHOTO: Aerial view of Old Harbour at the Port of Tallinn in Estonia. Port of Tallinn

“This makes Estonia one of the few countries in Europe offering direct financial support in the form of state aid for ship retrofitting,” the government said.

Shipowners and operators will be able to claim between 15-30% of eligible retrofit costs as subsidies, capped at €5 million ($5.7 million) per project.

The level of support will depend on the type of technology installed to reduce a vessel’s onboard emissions, with zero-emission potential technologies qualifying for the highest rates.

Theoretically, this could mean that ships retrofitted to run on alternative fuels like green hydrogen derivatives – with zero-emission potential - could qualify for the highest subsidy level at 30%. Onboard carbon capture and storage systems will also be eligible, but for slightly lower support.

“For maritime companies looking to modernize their fleets, the grant creates a significant incentive to adopt greener solutions such as installing hybrid engines, adopting equipment powered by renewable fuels, or implementing exhaust gas cleaning systems,” it explains.

Other technologies proven to improve fuel efficiency will also be eligible for lower levels of support.

In addition, the ship’s flag state and frequency of calls to Estonian ports will also influence the subsidy rate.

“With the maritime sector now included in the EU Emissions Trading System, this measure helps channel revenues collected from shipowners back into supporting their transition to greener technologies,” Kaupo Läänerand, Deputy Secretary General for Maritime and Water Affairs at the Estonian Ministry of Climate said.

By Konica Bhatt

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