A new white paper by Dr. Jeroen Dierickx for the Methanol Institute finds that the EU’s FuelEU Maritime Regulation and Emissions Trading System (ETS) will create a level playing field for bio- and e-methanol, making them competitive with fossil marine fuels.
According to the “Economic Value of Methanol for Shipping under FuelEU Maritime and EU ETS” white paper, the non-compliance costs for VLSFO are substantial, making bio- and e-methanol attractive alternatives. With average maximum prices under FuelEU Maritime of €1,193 per ton for bio-methanol (2025–2050) and up to €2,238 per ton for e-methanol (2025–2034), these regulations may create a supportive market environment for bio- and e-methanol fuel producers. This suggests that the regulatory frameworks could effectively encourage the transition to sustainable fuels in maritime shipping.
Furthermore, for fuel producers, the regulations provide a stable framework from 2024 to 2050, facilitating secure investments in the maritime sector.
Key findings
- Regulatory penalties and costs: The FuelEU Maritime Regulation sets targets for reducing greenhouse gas emissions from the maritime sector and imposes increasingly severe penalties on fossil fuels such as Very Low Sulfur Fuel Oil (VLSFO). Non-compliance costs for vessel owners will escalate from €39 per ton in 2025 to €1,997 per ton by 2050.
- EU ETS implementation: Regulatory costs under the EU ETS, carbon emission trading scheme that also covers the maritime sector, are phased in from 40% in 2024 to 100% in 2026. With a projected market price of €100 for CO2 emission allowances, the additional cost for VLSFO is estimated at €321 per ton.
Compliance options: To avoid these penalties, vessel owners can use bio- or e-methanol, or blends of fossil and sustainable methanol as viable compliance options and encourage the development of a sustainable methanol supply chain. - Price estimates: The analysis forecasts the average maximum price for bio-methanol to be €1,193 per ton from 2025-2050. For e-methanol, prices are estimated at €2,238 per ton from 2025-2033, decreasing to €1,325 per ton from 2034-2050 when the reward factor for using renewable fuels of non-biological origin (RFNBO) expires in 2034. Including EU ETS costs, these prices rise by €150 per ton for both fuels.
- Fuel blends: Every five years, the FuelEU Maritime greenhouse gas emission targets increase, from 2% in 2025 to 80% by 2050. These targets can be met by blending bio- or e-methanol with conventional natural-gas based methanol, increasing from 14% bio-methanol and 7% e-methanol in 2025 to 28% bio-methanol and 25% e-methanol in 2035, and fully 100% bio-methanol and 91% e-methanol by 2050.
- Economic viability: Both bio- and e-methanol show significant economic potential under the new regulations. The FuelEU Maritime Regulation and EU ETS are expected to effectively promote the adoption of these sustainable fuels in maritime shipping.
