EU strikes deal on world’s 1st green shipping fuel mandate

The European Parliament and the Council have reached a deal on the increase of maritime transport’s contribution to reaching the EU-wide target of achieving climate neutrality in 2050.

CC-BY-4.0: © European Union 2020 – Source: EP

Namely, early this morning co-legislators agreed on FuelEU Maritime – a new EU regulation ensuring that the greenhouse gas intensity of fuels used by the shipping sector will gradually decrease over time, by 2% in 2025 to as much as 80% by 2050.

The deal sets up a fuel standard for ships to steer the EU maritime sector towards the uptake of renewable and low-carbon fuels and decarbonisation. Under the agreement, big ships will be required to gradually reduce GHG emissions.

Namely, ships will have to gradually cut the amount of GHG in the energy they use (below 2020 level of 91.16 grams of CO2 per MJ) by 2% as of 2025, 6% as of 2030, 14,5% as of 2035, 31% as of 2040, 62% as of 2045 and 80% as of 2050.

This would apply to ships above a gross tonnage of 5000, which are in principle responsible for 90% of CO2 emissions, and to all energy used on board in or between EU ports, as well as to 50% of energy used on voyages where the departure or arrival port is outside of the EU or in EU outermost regions.

The Commission will review the rules by 2028 to decide whether to extend emission-cutting requirements to smaller ships or to increase the share of the energy used by ships coming from non-EU countries.

The deal gives more credits, as an incentive, in the form of offsetting emissions to those ship owners who use renewable fuels of non-biological origin (RFNBO) from 2025 to 2034.

The deal also set a 2% renewable fuels usage target as of 2034 if the Commission reports that in 2030 RFNBO amount to less than 1% in fuel mix.

The new rules also introduce an additional zero-emission requirement at berth, mandating the use of on-shore power supply (OPS) or alternative zero-emission technologies in ports.

In line with that, containerships and passenger ships will be obliged to use on-shore power supply for all electricity needs while moored at the quayside in major EU ports as of 2030. It will also apply to the rest of EU ports as of 2035, if these ports have an onshore power supply.

This should significantly reduce air pollution in ports. Certain exemptions, such as staying at port for less than two hours, using own zero-emission technology or making a port call due to unforeseen circumstances or emergencies, will apply.

The measure complements the provisional agreement reached on 18 December 2022 to include shipping emissions in the EU Emissions Trading System (EU ETS).

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FuelEU Maritime targets are expected to become more ambitious over time to stimulate and reflect the expected developments in technology and the increased production of renewable and low-carbon fuels. The targets cover not only CO2, but also methane and nitrous oxide emissions over the full lifecycle of the fuels.

Ships must and will shift away from fossil fuels and towards greener alternatives. With the long-term outlook of this agreement, we are sending a clear signal to the sector across the value chain, from shipowners and operators to fuel producers, shipyards and equipment manufacturers, that it is worthwhile and necessary to invest in sustainable maritime fuels and zero-emission technologies. This is fully in line with our efforts to support sustainable alternative fuels technologies under the new Net Zero Industry Act,” says Adina Vălean, Commissioner for Transport.

“This agreement sets out by far the world’s most ambitious path to maritime decarbonisation. No other global power has drafted such a comprehensive framework to tackle maritime emissions. This is truly ground-breaking,” said EP rapporteur Jörgen Warborn (EPP, SE).

“This regulation will force others to move too. Europe will do its fair share, but European citizens and companies should not foot the bill for the entire world’s climate efforts.”

As explained, the regulation will provide the sector with long-term rules and predictability, so that they dare to invest. It is also a strong signal to fuel suppliers to start producing these green fuels for shipping.

“Shipping companies and ports can focus their resources on delivering the greatest climate benefits and the most value for money. This protects the jobs of seafarers, dockworkers and workers in the
export industry, and sets an example for other countries to follow,”
Warborn added.

“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,” Delphine Gozillon, sustainable shipping officer at T&E, said.

E-fuels are one of the only options shipping has to decarbonise, where direct electrification for many vessels is not possible. However, the group warns that loopholes risk letting biofuels and low-carbon fuels in the backdoor. T&E has called on the EU to fix these when it revises the law by 2028.

The political agreement reached this morning must now be formally adopted. Once this process is completed by the European Parliament and the Council, the new rules will be published in the Official Journal of the European Union and enter into force 20 days after publication.