The Cyprus Shipping Deputy Ministry (SDM) launched a number of green incentives to reward vessels that are in line with the industry’s decarbonization goal, reducing the annual tax by up to 30% for each vessel that implements measures to reduce its environmental impact.
Accordingly, it is reported that from the fiscal year 2021, annual tonnage tax will be reduced by up to 30% for each vessel that demonstrates proactive measures to reduce its environmental impact.
The Cyprus flag will provide a ‘discount’ on its Tonnage Tax System with what it actually achieves. For instance, the reduction will be issued to vessels implementing the following:
- EEDI – vessels that have achieved further reduction of their attained EEDI compared to the required EEDI (Regulation 20 / MARPOL ANNEX VI) will obtain the respective annual tonnage tax rebate of between 5 – 25%.
- IMO DCS – the environmental incentive relating to the IMO Data Collection System (DCS) applies to ships of 5,000 GT and above that comply with Regulation 22A of MARPOL ANNEX VI. Ships which demonstrate reduction of the total fuel oil consumption in relation to the distance travelled, compared to the immediately previous reporting period will obtain an annual tonnage tax rebate of between 10 – 20%.
- Alternative fuels – vessels using an alternative fuel and achieving CO2 emission reductions of at least 20% in comparison with traditional fuels will receive a rebate on annual tonnage tax of between 15 – 30%. This will be reviewed on a case by case basis, following review of documents submitted from a class society.
The Ministry commented that
This includes the use of cleaner fuels, the deployment of the relevant fuel infrastructure, the electrification of ships, and the use of energy efficiency technologies. A combination of all of these options has the potential to improve the commercial and environmental sustainability of the sector, but shipowners need to be rewarded for investment in sustainable practices to accelerate uptake.
However, Cyprus Ministry added that any vessel detained for any reason during PSC inspection, that violates any regulation of the European Commission related to the environmental protection, or in laid-up condition (warm or cold) during the calendar year will not be eligible for the incentive.
Concluding, Cyprus is also in the process of formulating a long-term strategic vision for shipping, maritime and marine-related activities, addressing the current challenges and opportunities and setting a vision, mission and objectives for the next two decades (2021-2040).