Norwegian shipping companies are participating in a number of groundbreaking technology projects today, financed by the industry with support from the Norwegian and European authorities. At the same time, policy instruments are not equipped to scale up new solutions, and support evaporates when the technology is considered mature.

“We see that new technology is consistently being developed and introduced to the market, but as soon as it is taken into use, the support that makes it possible to roll out the technology on a large scale disappears. This black hole in the policy instruments has become a climate brake in the restructuring of the Norwegian maritime industry,” says Solberg.

In order to close the gap in policy instruments, Solberg believes the NOx fund provides a good example. The industry has had great success in reducing NOx emissions through technology development supported by the NOx Fund. From 2018 to the present, the fund has provided support for measures totalling about NOK 2.7 billion, which has helped to cut over 9,000 tonnes of NOx and over 450,000 tonnes of CO2.

The NOx fund is a success story that deserves a sequel.

Harald Solberg, CEO of the Norwegian Shipowners' Association

The NOx fund deserves a successor

“The NOx fund is a success story that deserves a sequel. Therefore, we believe that the area of responsibility for the NOx fund should be expanded to cover CO2 reducing measures, where income can be derived from increases in the CO2 tax,” says Solberg.

When shipping is incorporated into the EU quota system from 2023, large sums will be paid into the EU quota trading system. This represents several billion kroner that the Norwegian authorities will essentially get back, and which should be invested in a CO2 fund to contribute to technology development and investments in CO2 reducing measures.

“In EU countries, these funds from the quota trading system will go toward green measures. We believe that Norway must ensure that Norwegian quota revenues are also used to realize the green restructuring of the industry,” says Solberg.

Contract for differences needed

An important instrument that can also be financed through income from quotas and a CO2 tax is the so-called contract for differences (Cfd). Such contracts help reduce the price difference between traditional fuel and more climate-friendly alternatives.

“In an industry with low margins and fierce competition, it is crucial that price differences be reduced if development is to be accelerated. To speed up the green shift, we believe that funds from the CO2 tax and the EU’s quota trading system should be used to finance contracts for differences,” says Solberg.

In a transitional phase, until the price of alternative fuels fall, Cfds can contribute to expanded use of alternative fuels, which in turn can drive more rapid development of infrastructure for, and production of, alternative fuels. This in turn could bring about a change of pace in the green transition in the industry.

Major ambitions in the industry and with the authorities

Members of the Norwegian Shipowners’ Association have great ambitions of their own, and on behalf of their industry. As many as 9 out of 10 will invest in climate-neutral solutions when building new ships, and all will invest in technology that enables lower emissions than conventional technology.

“We are in the midst of a major restructuring of the international maritime industry, where everyone is investing in green solutions for tomorrow’s shipping. The industry, the policy instruments and the authorities all demonstrate high levels of ambition and commitment to green shipping. I believe this is reason to have high expectations for what we can achieve in the coming years,” Solberg concludes.