The European Parliament faces a key vote, and a major opportunity, on shipping decarbonisation

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The European Parliament faces a key vote, and a major opportunity, on shipping decarbonisation

In its next plenary sitting in Strasbourg, the European Parliament will hammer out its position on FuelEU Maritime, the principal piece of upcoming EU legislation on decarbonising shipping. 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 GHG intensity goals for both the short- and long-term. The European Commission’s proposal of a 6% reduction does not get us where we need to be in 2030 and fully decarbonise by 2050 according to climate science. It also fails to take into account ambitious mandates on ships to use of renewable e-fuels to 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 set to transition to alternative fuels, but the European Parliament needs to kickstart the process of industry adopting green ‘e-fuels’ which offer some of the highest and best environmental benefits. What is needed is a mandate known as a ‘sub-quota’, referring to the requirement that a share of fuel decarbonisation should happen specifically through these future-proof fuels. Environmental Defense Fund Europe and Transport & Environment 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 go the extra-mile. 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 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, which are currently several times more expensive than alternatives.

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 the existing wind reward factor.  

With an ambitious vote mid-October, European parliamentarians could have a tremendous influence on the shipping industry and regulators beyond its shores. Not only could a similar fuel standard eventually make its way to IMO’s global basket of measures, but companies adopting renewables-based fuels and technology would likely bring learning and decarbonisation across their global operations.