THERE IS a palpable sense of opportunity and fear across European shipping at the moment.

Europe’s political existential crisis has jolted the economic superpower into action and, in its time of need, shipping’s strategic importance has finally been recognised.

A window of political opportunity has been opened.

Plans are afoot and if an optimist squints hard enough there is a scenario where shipping gets what it has always been asking for — a cohesive, long-term maritime strategy that balances sustainability and global competitiveness.

Get it wrong and the brakes come off the current slow decline, which accelerates into something much more severe.

Closing the investment gap, by supporting public investment and facilitating access to finance is the key that unlocks most of the plans Europe needs and that is still an area which needs work.

Shipping needs a multibillion Euro shot in the arm from public and private financing in the EU and for all the public noises about shipping’s strategic importance, that’s simply not happening right now.

Stricter EU capital requirements for banks are part of the problem, but it runs much deeper than that.

The entire value chain, from producers to end users, claims to be ready for a green transition and investment in green fuel supply — but political support and financial incentives are needed to get projects off the ground and to ensure that Europe remains competitive on the global stage.

Some schemes have already gone to the wall and globally there is a serious problem developing around the cost of capital not being available where it is needed most. All things are not equal when it comes to funding.

Projects in regions with higher financing costs require substantially higher offtake prices to be viable, regardless of abundance of renewable resources such as onshore wind and solar. Countries in Africa, for example, could require offtake prices more than 80% higher than equivalent projects in Australia because of financing constraints.

Europe can’t solve all these problems on its own, but if it genuinely wants to take a leadership role it needs to get its house in order first. A credible plan to earmark funds for shipping’s green transition is needed if any of these political promises are to become a reality.

Specifically, that means earmarked revenues for the maritime sector under the Innovation Fund being used to bridge the price gap between conventional and clean fuels. It’s also needed to support investments in clean technologies providing an additional incentive for suppliers to scale up industrial production in Europe. But the EU’s Emissions Trading revenues are also going to be required to top up funds and they can’t start leaking into other priorities.

In short, the policy makers and industry leaders about to sit down for a pivotal two-day confab in Brussels at the European Shipping Summit need to move beyond the fragmented, short-term decision making of the past and produce some rapid answers and tangible plans. And those plans need to explicitly state where the money is coming from because without it, they mean very little.

Watch this space!

Richard Meade
Editor-in-chief, Lloyd’s List

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