India: Govt may back green ships, ports with VGF

The Union government may provide financial incentives for eco-friendly shipping vessels and port projects to promote sustainability and carbon transition, two people aware of the plans said. The plan will be an extension of the Harit Sagar or green port guidelines issued by the shipping ministry on Wednesday.

The incentives for the so-called Green Ship scheme may include viability gap funding (VGF), tax breaks and rebates, and priority for green ships at ports, the people cited above said on condition of anonymity.

“The concept of VGF and other incentives for turning Indian ports green is under formulation and consideration. It should be rolled out soon to motivate the green culture at ports,” one of the two people cited above said.

Under the plan, cargo ships used for exports and imports, as well as those used in coastal shipping, may get queue priority at ports or rebate in berth dues if they use cleaner fuel. Ports equipped to supply power to docked vessels will also be eligible for incentives since it cuts the use of the ship’s own fuel.

Questions emailed to the spokesperson for the shipping ministry, which will finalize the incentive scheme, remained unanswered till press time.

VGF is a partial government capital grant for large and long-gestation public-private partnership (PPP) infrastructure projects. These grants make projects commercially viable, encouraging private investments. Normally, VGF support is given to the lowest bidder, up to a maximum of 20% of the total project cost. An equal amount of VGF (20%) can also be extended by the central sponsoring ministry from its budget if it so decides.

The Green Ship scheme will also support private craft operators at ports using green fuels such as methanol, ethanol and hydrogen. Also, private operators, stevedores, agents, exporters and importers at the port who power their equipment and vehicles with green fuel or batteries may be given green certification and suitably incentivized.

Similarly, truck operators using green fuel or electric vehicles may be identified and incentivized. Detailed project reports (DPRs) of new PPP port projects must incorporate eco-friendly aspects, while existing PPP ports must devise suitable mechanisms to incentivize the concessionaires to adopt greener and carbon-neutral designs and procedures in line with the spirit of these guidelines.

The people cited earlier said the Green Ship scheme, including the plan for VGF, will work in tandem with a similar capital support scheme to support local shipbuilding. Manufacturing of ships will also go green under the new scheme.

On Wednesday, the shipping ministry introduced the Harit Sagar guidelines for green ports, aimed at achieving zero carbon emissions by promoting eco-friendly practices in port development, operation, and maintenance.

“Indian ports will play an important role in contributing towards de-carbonization efforts of the country. Ports have to undertake green initiatives and contribute to the efforts being made by the country for the fulfilment of ‘Panchamrit’ commitments announced by the Prime Minister during the CoP-26 Conference at Glasgow,” shipping minister Sarbananda Sonowal said at the launch of the guidelines.
Source: Livemint