Estonia becomes ‘one of Europe’s first countries’ offering aid scheme for green retrofitting

The government of Estonia has unpacked a €25 million grant aimed at supporting the reconstruction and greening efforts of passenger and cargo ships, tugboats, as well as other port and auxiliary vessels in domestic ports.

The grant, enacted by Estonia’s Minister of Infrastructure, Kuldar Leis, is envisioned to provide shipowners and operators with subsidies encompassing 15-30% of eligible retrofit costs, with a maximum of €5 million allocated per project.

For instance, to qualify for a 30% support rate, the government explained that the ship must be converted to operate in a zero-emission manner. In addition to this, factors like the vessel’s flag state and how frequently it calls at local ports will be taken into consideration when selecting the best candidate for the grant.

As disclosed, this makes Estonia one of the few nations in Europe that now offers direct financial support in the form of state aid for ship retrofitting.

“Global demand for cleaner maritime transport is growing rapidly. Estonian marine industry companies have the expertise and experience to deliver world-class retrofit services and support shipowners in making their fleets more environmentally friendly,” Minister of Infrastructure Kuldar Leis remarked.

“From design and technical consulting to implementation and maintenance, Estonian ports offer convenient and efficient hubs for retrofit projects,” he added.

According to the government, for maritime industry players seeking to modernize their fleets, this funding could prove to be a ‘tremendous’ incentive to adopt more sustainable solutions for their operations, such as installing hybrid engines and equipment powered by environmentally friendly energy sources or choosing technologies like exhaust gas cleaning systems.

As informed, other solutions that minimize pollution and boost energy efficiency are also eligible for support.

“This grant program marks a key milestone in Estonia’s drive toward greener, more sustainable maritime practices. By supporting the adoption of innovative technologies, we are helping maritime operators reduce their environmental footprint and prepare for future challenges,” Kaupo Läänerand, Deputy Secretary General for Maritime and Water Affairs at the Estonian Ministry of Climate, commented.

“With the maritime sector now included in the EU Emissions Trading System, this measure helps channel revenues collected from shipowners back into supporting their transition to greener technologies.”

With increasingly stringent environmental regulations on the horizon, demand is expected to rise for ships equipped with hydrogen and electric propulsion systems, carbon capture technologies, and ‘cutting-edge’ software solutions.

• Large-scale hydrogen valley project between Finland and Estonia set to kick off
• Nordic-Baltic Hydrogen Corridor project moves forward
• European Commission approves up to €1.4 billion for fourth hydrogen IPCEI

Estonia has been preparing to meet this demand through the Estonian Marine Greentech & Retrofit Hub, described as a “one-stop solution” offering green ship retrofitting services. Beyond this, the country has endeavored to decarbonize its maritime industry via a broad range of projects and initiatives. One of those is the vision of establishing a green shipping corridor with Finland.

To remind, in October 2023, the two nations signed a Memorandum of Understanding (MoU) to create a green shipping corridor on both sides of the Gulf of Finland, connecting Helsinki with Tallinn and Vuosaari with Muuga.

Exactly a year later, the FIN-EST Green Corridor greenlit 19 joint projects covering an array of initiatives that would support climate neutrality, marking the next phase of this vision.