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EU regulation is not enough to decarbonize shipping by 2050

09 August 2023

According to a new report from Transport & Environment (T&E), European shipping will still be dependent on fossil fuels after 2050. The FuelEU Maritime regulation must therefore be sharpened, the environmental organization believes.

In March this year, the EU adopted FuelEU Maritime, the world's most ambitious green shipping law to date with mandatory requirements for reduced greenhouse gas emissions for ships exceeding 5,000 gross tons. The regulation, which are an important part of the EU's "Fit for 55 package", also require that the ships connect to shore-based power supply during port stops. But Transport & Environment, which during the development of the law worked for all ships exceeding 400 gross tons to be included (which was also the Swedish line), has now made an analysis that shows that the regulation is not ambitious enough.

The analysis is based on a model that shows how actors in the industry are expected to react to the new directives and to rising fuel prices over the next 30 years. And the result shows that the transition will be far too slow for shipping to do its part for the world to reach the target of keeping global heating to 1.5 degrees. Fossil fuels will, mainly through the spread of LNG, be almost as dominant as today until 2035 and only around 2040 will fossil-free fuels account for a quarter of ship operations. In 2050, fossil fuels are in the majority and oil is almost gone, but LNG still accounts for a significant part of ship operations.

If the 1.5 degree target is to be reached, the share of green fuels (provided that large investments are also made in energy efficiency) must be at least 18 percent in 2035 and 85 percent in 2040, according to T&E. With the current climate package, the EU is thus more than 10 years behind such a development. Therefore, T&E proposes several improvements to the Fit for 55 package.

T&E recommends the next Commission and co-legislators to make a number of improvements to the ʻFit for 55ʼ package in the shipping sector:

  1. Align the greenhouse gas intensity (GHG) targets of FuelEU Maritime with a 1.5°C-compliant emissions trajectory from the global Science-Based Targets Initiative (SBTi).
  2. Set higher and additional RFNBO sub-targets for shipping, and remove the option for ships to use any advanced biofuels in place of RFNBOs; this would act as a stronger guarantee of demand for renewable fuels in the face of uncertainty over fuel prices, providing clarity to fuel suppliers.
  3. Set stronger penalties for non-compliance with the GHG intensity limits and RFNBO sub-targets in FuelEU Maritime, in order to discourage ʻpay-to-complyʼ as a viable alternative to fuel switching.
  4. Expand the FuelEU Maritime to include cargo and passenger vessels under 5,000 GT, as well as offshore vessels and other non-cargo ships. These ships made up an estimated 20% of WtW emissions in the EU in 2021.
  5. The LNG bunkering infrastructure mandate in the Alternative Fuels Infrastructure (AFIR) should be discontinued and replaced with mandates for fuels with a clearer pathway to sustainability, namely ammonia, methanol and hydrogen.
  6. The RFNBO supply target in RED III should be made mandatory in order to provide a minimum floor for the supply of sustainable fuels in maritime ports across Europe.
  7. Implement mandatory energy efficiency requirements on European shipping to bring down total fuel demand for a smooth transition.

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