EU agrees on GHG rules for marine fuels; tighter targets from 2035

EU institutions have agreed on what is set to be the world's first greenhouse gas emissions regulator for marine fuels, with stricter targets from 2035 than initially purposed, they said March 23.

Following months of negotiations, EU lawmakers and member states reached a provisional agreement to regulate the GHG intensity of fuels used by ships above 5,000 gross tons involved in the bloc's trades, covering CO2, methane and nitrous oxide on a life-cycle basis.

Vessel operators are required to cut the GHG intensity by 2% from 2025, 6% from 2030, 14.5% from 2035, 31% from 2040, 62% from 2045 and 80% from 2050, against 2020 baselines.

In July 2021, the European Commission, the EU's executive arm, proposed the same targets for 2025 and 2030, but 13% for 2035, 26% for 2040 and 59% for 2045, and 75% for 2050.

Jorgen Warborn, the European Parliament's rapporteur for the FuelEU maritime regulation, said in a statement: "This agreement sets out by far the world's most ambitious path to maritime decarbonization. No other global power has drafted such a comprehensive framework to tackle maritime emissions."

The rules will apply to all energy used on board in or between EU ports, as well as to 50% of energy used on voyages to or from the bloc.

"The agreement will ensure a level playing field and make sure that fuel suppliers, ships and maritime operators will have sufficient time to adapt for the new conditions so the maritime sector will deliver on the climate targets," said Andreas Carlson, Swedish minister of infrastructure and housing.

FuelEU Maritime is part of the EU's Fit for 55 policy package, designed to help the bloc cut emissions by 55% from 1990 levels by 2030 before reaching net-zero emissions by 2050.

Fuel mix

Many in the shipping industry have expected the regulator to promote more usage of biofuels, which can be used on a drop-in basis on ships with little modification to onboard marine equipment and bunkering infrastructure.

In an analysis released in 2021, nonprofit Transport & Environment estimated that biofuels in the EU's bunker mix would grow from negligible levels in 2020 to 18.8% in 2030 before a further jump to 35.3% in 2035.

But S&P Global analysts expect biofuels to account for 6.2% of global low-carbon bunker supplies in 2030 in its reference case, with road and air transportation sectors also fighting for biofuel supplies.

To promote the use of renewable fuels of non-biological origin, such as renewable hydrogen or ammonia, FuelEU Maritime allows the decarbonization effects of e-fuels to be counted twice between 2025 and 2034

The regulation also set a 2% renewable fuels usage target as of 2034, if the EC reports that in 2030 RFNBOs amount to less than 1% of the fuel mix.

"E-fuels are one of the only options shipping has to decarbonize...This [regulation] should make e-fuels more attractive to use," T&E said in a statement March 23.

"This is a step in the right direction to ensure shipping has the right tools for its energy transition," said Sotiris Raptis, European Community Shipowners' Associations' secretary-general. "But we need all hands on deck and, in particular, more robust requirements for fuel suppliers to deliver the clean fuels needed."

Simon Bennett, deputy secretary-general of the International Chamber of Shipping, said FuelEU Maritime is "a positive development" that will create a market for alternative fuels where bio-blends and LNG consumption will increase through this decade.

But the GHG reduction requirements post-2030 are "wishful thinking" as the supply of e-fuels -- whose decarbonization effects are greater -- are not ensured, Bennett added.

EU institutions are separately discussing a revision of the Renewable Energy Directive, which could eventually mandate European fuel suppliers to deliver 1.2% of all transportation fuels to the shipping industry in the form of RFNBOs from 2030.

Electrification

While electrification is not deemed as a viable decarbonization option in deep-sea trades, FuelEU Maritime has required container and passenger ships to use onshore power supply or adopt zero-emission technologies at major EU ports from 2030.

The requirement will be rolled out to the rest of EU ports where land-side electricity stations exist.

"The new rules...[come] with a view to mitigating air pollution emissions in ports, which are often close to densely populated areas," the EC said.