Industry calls for higher ambition in FuelEU, introduction of performance multipliers

Danish Shipping, Methanol Institute, and World Shipping Council are calling for increased ambition in the FuelEU, maximising GHG intensity reduction from 2035 to 2050 and supporting early use of green e-fuels.

Illustration; Image credit Maersk

The FuelEU Maritime proposal requires ships to reduce the GHG intensity of their fuels by 75% in 2050. However, the EU’s goal is to achieve carbon neutrality by 2050 and the requirement from the regulation on shipping doesn’t align with the overall decarbonization objectives of the union.

In an open letter to decision-makers in Brussels, industry representatives called on the EU legislators to seize the opportunity of the momentum building up in the industry to increase the ambition on GHG intensity reduction.

“As proposed the stepwise approach with incremental targets reflects that the production of e-fuels is still in its early stages. Over time new ships will enter the fleet and e-fuels will most likely become a common solution. Therefore, the reduction of GHG-intensity should be more ambitious, accelerating the pace of decarbonisation,” the letter reads.

“Secondly, recognising that the production of new e-fuels is still at an early stage, a dedicated mechanism to start production at scale is required. For example, a performance multiplier for green e-fuels such as e-methanol and e-ammonia will encourage earlier adoption that helps achieve long-term reduction in GHG intensity.”

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As more shipowners from the liner sector, including container and vehicle carriers, invest in new fleets that are ready for alternative fuels the demand for green fuels increases. This further adds to the growing disconnect between the demand and supply of alternative fuels that needs to be addressed during this decade.

Therefore policies and regulatory frameworks to ramp up the production of green fuels are crucial.

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“FuelEU Maritime is perhaps the most important of the EU legislations for shipping. Using performance-based targets with quantitative rigor based on lifecycle or Well-to-Wake metrics, FuelEU provides shipping companies the clarity needed for continued first mover innovation that will expand to broad uptake of renewable fuels across the fleets carrying essential cargoes to EU communities,” says Jim Corbett, Environmental Director for Europe at the WSC.

To further accelerate the uptake of the greenest fuels, the trilogue partners are negotiating whether to apply a “multiplier” for renewable fuels of non-biological origin (RFNBOs or e-fuels). Multipliers reward the use of new fuels in a phase-in period to accelerate shipping’s decarbonisation transition and promote the development of new e-fuels.  This is expected to increase demand for the new e-fuels and thus stimulate their production and availabuility.

“We support aggressive and achievable performance standards, including the use of performance multipliers, to ensure the best and most innovative development of practical pathways to renewable marine fuels,” Corbett.

“Introducing a multiplier has the advantage of being technology neutral and hence not pre-empting one production pathway rather than another. With such a signal the market and technology development will pave the way. As green fuels become abundant, the multiplier should be gradually phased out,” the letter added.

In this way the first movers would be rewarded for their efforts and it would help them catalyze change.

”It must pay off to lead the way. E-fuels are far from available in sufficient quantities and thus, it requires extensive planning to ensure supply when bunkering around the globe. Therefore, a mechanism is needed to incentivise the uptake. It must be more attractive to choose the new and more expensive e-fuels, rather than using the relatively cheaper other green, compliant fuels”, says Maria Skipper Schwenn, Executive Director of Climate, Environment and Security at Danish Shipping.

”By 2030 at least five percent of the world fleet should be operating on green fuels, so it is key that the production is ramped up already in this decade with a view to full decarbonisation by 2050. That is why we need stimulating levers such as the multiplier.”