The European Parliament’s big opportunity to decarbonise shipping

October 10, 2022

The Fuel EU Maritime proposal is the EU's big chance to clean up a sector that has long been resistant to change. What needs to be done?

In its next plenary sitting in Strasbourg, the European Parliament will hammer out its position on FuelEU Maritime – the principal piece of upcoming EU green shipping legislation. With EU Member States having already adopted their negotiating stance earlier in the year, this may be the last chance the legislators have to incorporate key provisions that can drive the uptake of next-generation e-fuels and eliminate fossil fuel use in shipping. 

The first thing they can do is set the right greenhouse gas intensity (GHG) goals for both the short- and long-term. The European Commission’s proposal of a 6% reduction doesn’t get us where we need to be in 2030 to fully decarbonise by 2050. It also fails to take into account ambitious mandates on ships to use renewable e-fuels for shipping, not to mention a boom in shipping tech like wind-assisted propulsion. An overall GHG reduction target of -13% in 2030 would set the right direction and will likely find proponents among member state governments.

Shipping is ready to transition to renewable e-fuels, but the European Parliament needs to kickstart the process through a mandate. This is known as a ‘sub-quota’, referring to the requirement that a share of fuel decarbonisation should happen specifically through these future-proof fuels. The Environmental Defense Fund Europe and Transport & Environment, together with the hydrogen industry, have recommended that a sub-quota of 6% e-fuels in 2030 will be needed to kickstart this transition.

But as shipping is a highly competitive industry, operators could be reluctant to invest in fuels that are more expensive in the short-term. Ambitious first movers should therefore be rewarded through a so-called ‘multiplier’ for volumes used on top of the sub-quota. The importance of this measure cannot be overstated: as fuel supplies of green e-fuels slowly come into the market later this decade, they will be scarce and costly. A multiplier of 5 would bridge the gap of cost of compliance for green e-fuels.

Ships can also harness renewable power, notably wind and solar, directly on board potentially saving 10-20% of the fuel burn of modern commercial ships. As these renewable technologies are commercially available today, they offer industry an excellent way of reducing emissions while improving the business case of green fuels. Once again, MEPs have a chance to encourage investments in green technologies, by boosting rewards for the use of wind propulsion.

With an ambitious vote later this month, European parliamentarians could have a tremendous influence on the shipping industry and regulators beyond its shores. This is the chance to set the global gold standard for shipping. 

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