Biofuels may raise enforcement concerns, new study finds

The European Community Shipowners’ Associations (ECSA) and the International Chamber of Shipping (ICS) have commissioned a new study on the upcoming FuelEU Maritime proposal raising serious concerns over biofuel promotion.

The study, FuelEU Maritime – Avoiding Unintended Consequences, was prepared by Dr Edmund Hughes of Green Marine Associates.

As informed, there are a number of issues concerning the cost, availability and specification of biofuels, as well as important questions about enforcement, which the EU will need to take into careful account if promotion of the use of biofuels is to form a central part of the FuelEU Maritime initiative.

To remind, the FuelEU Maritime is an initiative launched in early 2021 by the European Commission with the aim to increase the use of sustainable alternative fuels in European shipping and ports and drive decarbonization and sustainability within the industry.

According to the joint study, FuelEU Maritime raises a number of important issues:

• There are significant challenges in enforcing EU fuel standards outside the EU’s jurisdiction;
• A standard for fuels purchased internationally would, in essence, mandate the use of biofuels by ships due to the lack of any viable alternative fuels, especially for deep sea shipping;
• There are a number of outstanding issues concerning the cost, availability and specification of biofuels, as well as important questions about enforcement relating to EU’s sustainability criteria;
• The introduction of an extremely complex compliance system, whereby ships unable to use or gain access to fuels that meet the required EU standards might instead be required to purchase credits from other companies or the Commission itself;
• Any EU regulation of marine fuel standards may also create serious concerns among non-EU States about what they may perceive to be an extra-territorial approach, leading to a two-tier market.

Claes Berglund, ECSA President, commented: “The European shipping sector is committed to decarbonise the shipping industry as quickly as possible. However, shipowners cannot be held accountable for the quality of fuels. This is the sole responsibility of fuel suppliers.” 

“We understand that the Commission wants to implement  EU’s sustainability criteria to all fuels covered by the proposal but placing the legal responsibility for the fuel standards on ships does not address the substantial enforcement challenges, especially with regard to biofuels,”Martin Dorsman, ECSA Secretary General added.

Unless these important issues are appropriately considered by the EU institutions, there is a risk that FuelEU Maritime could be ineffective, or even counterproductive, according to the research.

ECSA also noted that the GHG emissions from shipping that might be affected by FuelEU Maritime will only represent a relatively small proportion (15%) of the global sector’s total emissions, which have already decreased significantly compared to 2008.

In February, ECSA announced that the future EU fuel standard requirement should merely concern fuel suppliers and not vessels.

According to EU shipowners, the European Commission should address fuel suppliers by introducing sub-targets to make low- and zero-carbon fuels available for shipping and by increasing the multiplier for renewable fuels used in the maritime sector under the Renewable Energy Directive (RED).

They also proposed an introduction of a Market Based Measure (MBM) which would enable investing in the revenues to support the uptake of these fuels.

Guy Platten, Secretary General of the International Chamber of Shipping said: “You wouldn’t penalise a car owner for being sold the wrong fuel at a petrol pump, yet this is exactly what will happen to shipowners with the FuelEU maritime proposal.”

The study concludes that “if the FuelEU Maritime proposal is designed in a proper way, it may contribute to addressing the barriers identified in the IMO GHG Strategy and may stimulate demand for of low and zero-carbon marine fuels which is currently negligible.”