Incentives for onshore power

One of the elements proposed in the (Dutch) Green Deal on Maritime Shipping, Inland Shipping and Ports is to revoke the energy tax on onshore power used by shipping. The ministries of Infrastructure & Water Management and Finance asked CE Delft to compare this form of incentive for onshore power with two alternatives: an operating subsidy and an investment subsidy. To ensure fair comparison, it was endeavoured to set the magnitude of the financial incentive the same for all three measures. It was also assumed that all three are rolled out in 2021 and in force for a period of five years.

Because onshore power is already widely used by the inland shipping sector and in many cases also financially attractive (and/or compulsory), the comparative analysis in this study focuses on maritime shipping, for which its use is not yet financially attractive, improving the scope for incentivizing it via financial measures.

In our analysis -– based on a desk study, calculations with CE Delft’s OPS computer model and interviews with market players and implementing bodies -– we compared the three instruments on indicators like efficacy, implementation costs, administrative burden, cost per avoided tonne emission, ease of implementation and alignment with the Green Deal.

Our analysis shows that none of the three measures on their own will likely encourage use of onshore power by maritime shipping, as the financial incentive is insufficient for a conclusive business case. Efficacy can be improved by combining instruments, increasing the financial incentive offered (e.g. by a higher subsidy per onshore connection) or by seeking combinations with local or European incentives for onshore power.

A direct comparison of the three measures shows that an important advantage of exempting onshore power from the energy tax is that in practice this would mean the same cost structure for onshore power and generator power. Such an exemption would also enjoy maximum support by the industry, above all because it would be in line with the agreements already reached under the Green Deal. In terms of implementation costs and administrative burden there is little difference between the measures and we see no major problems in this area. Likewise, in terms of ease of implementation, verifiability, enforceability and fiscal implementation we anticipate no major issues.