EU okays €570 million funding for Italian shore power scheme

June 19, 2024, by Fatima Bahtić

The European Commission (EC) has approved, under European Union (EU) state aid rules, a €570 million Italian scheme to incentivize ships to use shore-side electricity when they are at berth in maritime ports.

Italy notified the EU Commission of its plans to adopt a €570 million scheme to incentivize ship operators to connect to shore-side electricity infrastructure when at berth in maritime ports in order to power onboard services, systems, and equipment.

Under the scheme, the aid takes the form of a reduction of up to 100% of the so-called ‘general system charges’. Those charges are included in the electricity price and aimed at financing certain public policy objectives, including renewable energy.

According to the officials, the reduction will result in a lower electricity price for ship operators when purchasing shore-side electricity and will bring the cost of electricity to a competitive level with the cost of producing electricity on-board through fossil-fueled engines.

Italy hopes that, by lowering the cost of shore-side electricity for ships, the measure will incentivize ship operators to opt for a more environmentally friendly electricity supply, thereby avoiding significant greenhouse gas emissions, air pollutants, and noise emissions.

Initially, the reduction will cover 100% of the general system charges.

Italy committed to setting up an annual monitoring mechanism to verify the difference between the actual costs of purchasing shore-side electricity and the actual costs of self-generating electricity using fossil fuels onboard.

The country plans to adjust the level of aid accordingly. The scheme will run until December 31, 2033.

This €570 million Italian scheme will incentivise ship operators to use shore-side electricity rather than electricity produced on-board from fossil fuels. With this measure, Italy will contribute to the ambitious EU target of reducing transport emissions by at least 90% by 2050 while ensuring competition is not distorted,” Margrethe Vestager, Executive Vice-President in charge of competition policy.

The measure is expected to contribute to reducing greenhouse gas emissions, air pollution and noise in line with the objectives of the European Green Deal.

With the European Green Deal Communication in 2019, the Commission set an objective of net zero emissions of greenhouse gases in 2050 that is enshrined in the European Climate Law.

In force since July 2021, the law also introduced the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030. Through the adoption of the ‘Fit for 55′ legislative proposals, the EU has in place legally binding climate targets covering all key sectors of the economy.

In September 2023, the European Parliament and the Council adopted the FuelEU Maritime Regulation setting up a common EU regulatory framework to increase the share of renewable and low-carbon fuels in the fuel mix of international maritime transport.

Moreover, the Alternative Fuel Infrastructure Regulation was set up to ensure the availability of a dense and widespread network of alternative fuel infrastructure across the European Union, including onshore power supply infrastructure at EU ports.