EU legislators have agreed on greenhouse gas emissions reduction targets for the maritime transport sector.
- The EU will implement new rules to reduce the maritime transport sector’s emissions by promoting the use of cleaner fuels and energy.
- Waterborne transport generated 3-4% of the bloc’s total CO2 emissions in 2021, but shipping is vital to its economy.
- The new policy is sending a clear signal to the sector across the value chain that it is worthwhile and necessary to invest in sustainable maritime fuels and zero-emission technologies.
The European Parliament and the Council have agreed on FuelEU Maritime, in an effort to reduce the sector’s greenhouse gas (GHG) footprint by promoting the use of cleaner fuels and energy. It complements the provisional agreement reached in December 2022 to include shipping emissions in the EU Emissions Trading System (EU ETS), which means that the industry will have to pay for the emissions it generates from 2023 onwards.
What is FuelEU Maritime?
The rule imposes on the maritime transport sector to reach the EU-wide target of reducing net GHG emissions by at least 55% by 2030, and climate neutrality in 2050 – in line with the European Green Deal. The idea is to ensure that the GHG intensity of fuels used by the shipping sector will gradually decrease over time – by 2% in 2025 to as much as 80% by 2050 – by switching to sustainable fuels. To achieve climate neutrality, the EU needs to reduce transport emissions, including from maritime transport, by 90% by 2050 compared to 1990 levels.
FuelEU Maritime will help decarbonise the maritime transport sector by setting maximum limits on the yearly GHG intensity of the energy used by a ship. Those targets will become more ambitious over time to stimulate and reflect the expected developments in technology and the increased production of renewable and low-carbon fuels. They will not only cover CO2, but also methane and nitrous oxide emissions over the full lifecycle of the fuels.
The new rules also introduce an additional zero-emission requirement at berth, mandating the use of on-shore power supply or alternative zero-emission technologies in ports by passenger ships and containerships, with a view to mitigating air pollution emissions in ports, which are often close to densely populated areas.
FuelEU Maritime takes a goal-based and technology-neutral approach, allowing for innovation and the development of new fuel technologies to meet future needs, and offering operators the freedom to decide which to use based on ship-specific or operation-specific profiles. It also includes a voluntary pooling mechanism under which ships will be allowed to pool their compliance balance with one or more other ships. As such, it will be the pool as a whole that has to meet the GHG intensity limits on average.
Why does the sector need to address its footprint?
In the EU, waterborne transport generated 3-4% of total CO2 emissions in 2021. Despite a drop in activity in 2020 due to the coronavirus pandemic, shipping is expected to grow, fuelled by rising demand for primary resources and container transport. Without drastic action, global maritime shipping emissions are projected to contribute as much as 17% of global CO2 emissions by 2050.
Its footprint cannot be ignored, as the sector contributes to around 75% of EU external trade volumes and 31% of EU internal trade volumes, making it a critical part of the bloc’s economy.
There are not many options beyond e-fuels, however, as direct electrification for many vessels is not possible. Only 575 of the more than 400,000 commercial vessels around the world today are currently fitted with electric and hybrid propulsion systems.
The bloc is looking to maintain a level playing field and ensure that the market for sustainable maritime fuels will grow and that maritime transport continues to function well while contributing to the EU’s climate goals. It intends to do so by increasing the demand for renewable and low-carbon fuels.
This will provide legal certainty for ship operators and fuel producers and help kick-start the large-scale production of sustainable maritime fuels. In turn, this will help reduce the price differential between fossil fuels and sustainable options. A special incentive regime has been included to support the uptake of renewable fuels of non-biological origin with a high decarbonisation potential.
“The beginning of the end for dirty shipping fuels”
According to the campaign group Transport & Environment (T&E), the agreement marks the world’s first green shipping fuel requirement as negotiations are still ongoing at the global shipping regulator, the International Maritime Organization. The EU law is sending “a strong signal” to potential investors and fuel suppliers to start producing these green fuels for shipping.
Campaigners, however, warned that loopholes risk letting biofuels and low-carbon fuels in the backdoor. As such, T&E called on the EU to fix these when it revises the law by 2028.
Because the final agreement includes stricter GHG intensity targets, as well as a bonus for the use of green e-fuels until 2035 with the so-called ‘multiplier of 2’, it should make e-fuels more attractive to use from the entry into force of the regulation in 2025.
Delphine Gozillon, sustainable shipping officer at T&E, said: “Today’s decision marks the beginning of the end of dirty fuels in shipping. The EU is charting the way with the most ambitious package of green shipping laws ever adopted. This success should inspire other countries to do the same.”
