The Draghi report identifies shipping as one the most difficult sectors to decarbonise, requiring annual investments of 40 billion Euro. It stresses that building a supply chain for alternative fuels is critical for the EU to meet its climate targets, ECSA highlights.
In a position paper released today, European Shipowners put forward their recommendations to support the uptake of clean fuels in shipping.
The ‘Fit for 55’ package and the recent historic IMO agreement on Greenhouse Gas Strategy have set clear targets for shipping to reach net-zero by 2050. To meet its European and international climate targets, shipping urgently needs priority access to clean fuels, in sufficient quantities and at affordable prices.
To accelerate the production and uptake of clean fuels for shipping, European shipowners put forward the following recommendations:
- Use the EU ETS revenues to bridge the price gap between clean and conventional fuels, notably via dedicated calls for shipping under the EU Innovation Fund, and tailored mechanisms such Auctions-as-a-Service or Grant-as-a-Service.
- Foster the production of clean fuels for shipping by strengthening the provisions of the FuelEU Maritime Regulation and of RED III by introducing a mandate on fuel suppliers to produce in the EU at least 40% of the shipping fuels needed to comply with the FuelEU Maritime targets. Shipping should be given priority access to clean fuels as advocated by the Commission’s Communication on the 2040 climate target.
- Develop energy hubs and deliver on safety. Infrastructure is a prerequisite to the decarbonisation of the shipping sector. Under the upcoming Maritime Industrial Strategy, the 40% production call for clean fuels in Europe should be translated into concrete requirements for port infrastructure, as well as investments to turn major European ports into energy hubs.
The Draghi report identifies the development of a supply chain for clean fuels as a priority for the EU, warning that otherwise the costs of meeting its climate targets will be significant. The report also highlights the significant price gap between conventional and clean fuels, which for shipping can be up to five times more expensive. Shipping faces stiff competition from other transport modes for access to clean fuels, in particular advanced biofuels and e-fuels.
ETS revenues to bridge the low and zero carbon fuels price gap
Decarbonising shipping will require access to public funding and private finance. The EU ETS generates revenues, which will feed into EU Funds, the EU budget as well as Member States’ national budget. These revenues should be used to support the uptake of low and zero carbon fuels, while ensuring a level playing field and not leading to market distortions.
ECSA recommends that:
- The revenues of the EU ETS should be spent on energy transition-related activities to decarbonise the shipping sector at the EU and the Members
States’ levels. The earmarked revenues for the maritime sector under the Innovation Fund should be used as soon as possible to foster the decarbonisation of the sector and bridge the price gap between conventional and low and zero carbon shipping fuels and be prolonged after 2030. Administrative burden should be limited to ensure that SMEs, which are the backbone of the shipping sector, can apply to the calls of the Innovation Fund. - The Commission should tailor dedicated mechanisms, such auctions or (carbon) contracts for difference, to scale-up the production of low and zero
carbon fuels for the shipping sector, using the experience it gained from the European Hydrogen Bank pilot auction. - Under the 2023 European Hydrogen Bank pilot auction, the Commission introduced a new mechanism called “Auctions-as-a-Service”. It allows
Member States to use their EU ETS national revenues to top up EU auctions to increase the number of projects funded. ECSA calls on the Commission
to introduce this mechanism for any calls opened under the Innovation Fund and on Member States to use this opportunity to multiply the effects of the
Innovation Fund. In addition, an equivalent system should be established under the general Innovation Fund calls, that-is-to-say to introduce a
“Grant-as-a-Service” in the framework of the next calls, to encourage Member States to fund projects, which were eligible but could not be funded due to a lack of EU funds.
The Draghi report highlights that shipping is one of the most difficult sectors to decarbonise requiring nearly €40 billion of annual investment. We need all hands on deck to cover the enormous price gap between conventional and clean fuels that can be up to five times more expensive.
…said Sotiris Raptis, ECSA Secretary General. “The energy transition is a great opportunity for Europe to increase investments in clean tech and fuels and enhance the international competitiveness of our industry. We call for a 40% production target for clean shipping fuels in Europe, in line with the benchmark of the Net-Zero Industry Act. The EU can leverage the transition of shipping to strengthen fuel manufacturing in Europe, as part of the upcoming Clean Industrial Deal and the Maritime Industrial Strategy”
To remind you, Raptis gave an interview with SAFETY4SEA at the Posidonia 2024 exhibition, which took place from June 3-7, 2024, in Athens, Greece.
