Reinforcing the ETS SMAP to guarantee long-term shipping decarbonisation

The SMAP mechanism introduced under the ETS represents an opportunity to help the maritime sector to transition towards clean fuels and propulsion technologies, and strengthen Europe’s industrial leadership. With an estimated support of €15 billion between 2028 and 2040, such a mechanism could encourage shipping companies to use green e-fuels, which will need to be scaled up in this period to meet long-term decarbonisation targets. The European Commission’s Sustainable Transport Investment Plan (STIP) mentions that in less than a decade, 4.6 million tonnes of e-fuels could be needed to reach FuelEU targets.

A high price difference coverage in favour of e-fuels compared to other alternative fuels under SMAP is a welcome step, but is unlikely to be sufficient in itself to ensure a genuine move towards e-fuels. Because of the capital-intensive nature of e-fuels production, these projects will require producers to enter long-term offtake agreements with companies in order to secure investment. The current SMAP proposal is unlikely to provide sufficient support to this process. While some alternative fuels and zero-emissions propulsion technologies have a role to play in reducing maritime GHG emissions, SMAP should be used primarily to reward long-term e-fuel use, rather than short-term fuel and propulsion technological options which may already be incentivised under existing legislation.

As negotiations on the ETS file continue, we encourage you to include following changes to SMAP to ensure the mechanism drives investments in genuine long-term e-fuel options: