IWT Funding best practices

IWT Funding – Best practices and
what we learned
CCNR ECO committee
5 OCTOBER 2022

01. 02.
Introduction
1. The need for financial
incentives
National experience
Feedback on regional
level
03. 04.
EU experience
1. Feedback from
recent proposals
Conclusions
What’s in for the CCNR
ECO Committee

01. Introduction
The need for financial incentives

The need for financial support in IWT
à There is no business case for ‘green’ vessels (newly built or retrofit)*
à It’s a positive stimulation towards innovation & it works
à There is no (EU) regulation trigger besides the EU Directive NRMM
2016/1628 which incentiveses the IWT sector towards ‘greening’
à All alternatives to fossil fuel techniques are more expensive
à Customers/shippers are not actively demanding a ‘greener’
transportation mode
à Customers/shippers are in general not actively providing a higher
transportation price - most economic solution is the best solution
The need is clear, thus the access needs to be as easy as possible.
*CCNR study on energy transition towards a zero-emission inland navigation sector

02. National
experience
Feedback on regional level

Financial schemes that were mentioned
B - ‘Prime à l’acquisition d’un bateau de navigation intérieure d’occasion’
B - Steunmaatregelen (De Vlaamse Waterweg nv)
DE - BMDV: „Förderprogramm zur nachhaltigen Modernisierung von
Binnenschiffen“
DE - BMDV: „Förderprogramm zur Umrüstung von Gütermotorschiffen mit
emissionsärmeren Dieselmotoren“
DE - KfW: „KfW-Umweltprogramm – Kredit 240/241“
NL - DKTI
NL - RDM regeling Subsidieregeling R&D Mobiliteitssectoren (RDM)
NL - Tijdelijke subsidieregeling verduurzaming binnenvaart
NL - Nationaal Groeifonds

What did we learn - SCOPE
Most financial schemes focus on specific techniques, which narrow the
scope and create the illusion of excluding options/innovation/the market.
Recommandations:
Broaden the technical scope
à e.g. aiming at a certain goal to be achieved instead of a technique to answer to
à focus on modular innovative techniques, creating a ‘no regret decision’ for vessel
owners – e.g. electromotor with modular/adaptable energy source – e.g. state of the
art techniques such as STAGE V
à clear approach for retrofitting and another one for newly built vessels
Broad innovative scope means technical neutrality for the vessel owner, supporting
technical manufacturers, such as digital innovation, noise reducing measurements,
IWT automation, logistic efficiency measurements, etc.
Being as inclusive as possible

What did we learn – CAPEX v.s. OPEX (AND INFRA)
Financial support is usually given (%) on the additional CAPEX costs.
Additional OPEX costs are most of the time excluded and so is financial
support for possibly needed infrastructure.
Recommandations:
à As long as alternative energy sources are more expensive compared to
fossil fuels, the stimulation of OPEX costs are needed in every way possible
(financial support/regulation/…)
à To include infrastructural stimulation, forming a consortium could be an
additional requirement for extra means (but not a limitation!)
Making alternative fuels attractive

What did we learn – BUSINESS SIZE
The IWT sector is known for it’s SME structure. This goes from small business
owners with 1 vessel to businesses with 50+ vessels. A trend can be seen that
financial institutions are leaning towards favoring coöperative approaches to
reduce the risk (even temporary coöperations).
Recommandations:
à To reduce the risk for all parties and maximize the goal towards
innovation, additional requirements could be made to stimulate the creation
of a consortium with different parties (but not a limition!)
à Small vs large businesses need a different approach (risks are different)

- What did we learn - REQUIREMENTS
Financial schemes can focus on the location of the business and not
the region where the vessel(s) are active (or both). E.g. a company needs
to be based x amount of years in a certain country/region to be eligible
although the sailing region is adequate.
Recommandations:
IWT is a cross-border transportsector, which needs to be taken into
account when providing financial incentives.
à Focus on the activity of the vessel in the country/countries and not on
the flag of the vessel (e.g. claim sailing hours)
à Don’t exclude newly built vessels (no historical sailing hours yet) but
work with a to be proven clausule/transport contract/…
All shipowners face the same bottle necks and challenges.
Being as inclusive as possible

What did we learn - TIMING
Financial schemes are usually open for a certain amount of time, between 1
and 3 years. No negative feedback, though innovation and regulation is
changing quickly. Flexibility for change within the timeframe could be
beneficial for all parties.
Recommandations:
à Fixed timing with regular renewal (e.g. annual, bi-annual, …) and
discussion with national representatives for check up (PDCA – Plan, Do,
Check, Act)
à Timing based on calls (e.g. open call for 3 months) for specific purpose or
topics which need a trial/extra motivation/…

What did we learn – TRL v.s. AMOUNT OF SUPPORT
High TRL usually comes with lower financial support; although vessel owners
are looking for solutions which are usually between TRL 7-9. The ‘no regret
investment’ in a market where technical clarity is difficult to create. The
innovation cycle is still at full pace and will be the upcoming decade.
Low TRL comes with higher financial support – hesitation since the high risk
of not being future proof and additional technical issues because of the low
TRL.
Recommandations:
à The amount of financial support (%) can be differentiated with the TRL of a
technique. Keep/make the support high enough for high TRL techniques to
close the gap and allow the creation of a business case.
Minimum of 50% financial support is proven to work

03. EU experience
Feedback from recent proposals

EU Funding Programs - TRL
In regards of grants for innovation and research activities, it is stated in the
last Horizon 2020 work programme (2018-2020) that funded projects
should cover a wide range of activities across the innovation cycle,
including different TRL levels.
However, it was mentioned that “grants shall not be awarded for actions
where activities go above TRL 8”.
The same threshold is also applied within the Horizon Europe regulation.*
à Need for national funding support for TRL 7-9 to be complimentary
with EU funding support
*European Commission COM(2018) 435 final https://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=CELEX%3A52018PC0435

TRL Levels - Defenition
Within the European Union and its preceding support programme for
research and innovation activities, Horizon 2020, TRL was defined within the
“HORIZON 2020 –WORK PROGRAMME 2014-2015” Annex G “Technology
readiness levels (TRL)” as following:
TRL 1: basic principles observed;
TRL 2: technology concept formulated;
TRL 3: experimental proof of concept;
TRL4: technology validated in lab;
TRL 5: technology validated in relevant environment (industrially relevant
environment in the case of key enabling technologies);
TRL 6: technology demonstrated in relevant environment (industrially
relevant environment in the case of key enabling technologies);
TRL 7: system prototype demonstration in operational environment;
TRL 8: system complete and qualified;
TRL 9: actual system proven in operational environment (competitive
manufacturing in the case of key enabling technologies; or in space)
European Commission, HORIZON 2020 –WORK PROGRAMME 2014-2015” - Annex G:
https://ec.europa.eu/research/participants/data/ref/h2020/wp/2014_2015/annexes/h2020-wp1415-annex-g-trl_en.pdf

EU Funding Programs – ADMIN. BURDEN
- Only for large companies, who have the human capital/time/resources
- Need for a specialized company to support the proposal writing
- Not for the small business owners
- Need for consortium
- Risk of not being selected
- Financial benefits are very low/too low
à Need for national funding support to be as easy as possible since EU
funding needs specialized companies
*European Commission COM(2018) 435 final https://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=CELEX%3A52018PC0435

EU Funding Programs – IWT EXPERIENCE
Many declined proposals which were shared confidentially show in the
feedback that ‘the reader’ of the proposal wasn’t familiar (enough) with IWT
as a transport mode.
The success rate of IWT proposals is very low.
- Text not strong enough
- Innovative impact not high enough
- TRL not low enough
- Financial support not high enough to cover the costs/risk
- …
Even though specialized companies are helping these entrepreneurs.
Recommendations:
à Making EU Commission more familiar with the challenges IWT is
facing and possible solutions for it – Call for flagship projects
à Strengthen relationships with specialized subsidy companies

04. Conclusions
What’s in for the CCNR committee

First: Funding actually works…
…when all the puzzle pieces are aligned
The fact that things change immediately when a marketable,
reliable system is available and the funding is attractive can be
seen in the many passenger vessels that have installed
completely electric propulsion systems as a result of the funding.
Another example is CLINSH and the 20+ vessels which installed
the market ready after treatment systems (80-90% reduction for
air quality emissions!)
The Dutch scheme ‘SVB’ for renewing an old engine by state of
the art STAGE V is asking for extra sources.
Etc.

Bottle neck: Legal limitations
De-minimis regulation with the consequence that the maximum amount
per company is €100,000, and € 200,000 for small enterprises.
(Hydrogen already + € 1 milj. CAPEX meaning 20% financial support is not
enough)
Example of the GBER applications is the Dutch Ministry of Transport who
obviously assessed the legal situation differenty and bases the funding on
Art. 36 (1) of the GBER. Nevertheless, the support is limited to 200,000 € per
ship, perhaps in order to have a safeguard through the de-minimis
regulation, at least for the small companies.
With the new Environmental Guidelines, it will no longer be possible to
fund NRMM-compliant engines at all, even though that would be the most
achievable measure for cargo shipping at the moment.
The German financial scheme can co-finance up to 80%, can we learn from
this?
à Can we create another financial ceiling?

Bottle neck: Fiscality
Examples of credit funding, which presupposes that a bank is available to
provide the financing. Limitation here, it depends on the cost of the measure
and the company’s capital resources.
Funding can be seen as income in some regions, causing the funding to be
taxable. This is also a well-known problem.
à Can an overview of the fiscal impact be made per country and avoid
non-aligning measures?

General
There is a clear need for (national) funding!
àThere is no single access point/person to approach for an overview of national
funding possibilities (e.g. EIBIP non active)
àThere is no international public list of success stories of national funding to learn
from and get inspiration
àNeed for national funding support to be as easy as possible (administrative) since
EU funding needs specialized companies
àNeed for national funding support for TRL 8-9 to be complimentary with EU
funding support
àCan we stimulate another financial ceiling? Can we learn from other countries?
àCan an overview of the fiscal impact be made per country and avoid non-aligning
measures?
àMaking EU Commission more familiar with the challenges IWT is facing and
possible solutions for it – call for flagship projects

Thanks!
Daisy Rycquart
daisy@citbo.com