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EU Council adopts green fuel requirements for the maritime sector

Economics

The EU has agreed on the final rules for climate-neutral shipping, with the adoption of the FuelEU Maritime initiative.

The new EU law to decarbonise the maritime sector has cleared its final adoption stage, putting an end to two years of intense negotiations. 

The main objective of the initiative is to increase the demand for and consistent use of renewable and low-carbon fuels, and reduce greenhouse gas emissions from the shipping sector. Under the new agreement, shipping will be covered by the EU’s emissions trading system (ETS) from 2024 and FuelEU Maritime from 2025.

As part of this effort, the new regulation includes measures to ensure the greenhouse gas intensity of fuels used by the shipping sector decreases by 2 per cent in 2025 and by as much as 80 per cent by 2050. Additionally, there will be rules for the infrastructure of alternative fuels, including requirements for using shore power in selected larger ports.

“The new law will provide legal certainty for ship operators and fuel producers, and help kick-start the large-scale production of sustainable maritime fuels, thus substantially delivering on our climate targets at a European and global level,” said Raquel Sánchez Jiménez, the Spanish minister for transport, mobility and urban agenda.


EU green fuel requirements

EU green fuel requirements / European Council

Image credit: European Council

In addition to the decarbonisation targets, the new green fuel law will establish a special incentive regime that will provide support for the uptake of renewable fuels of non-biological origin with a high decarbonisation potential.

Moreover, fossil fuels will be excluded from the regulation’s certification process and, from 2030, passenger ships and containers will be required to use an onshore power supply for all electricity needs while moored in major EU ports, with a view to mitigating air pollution in ports.

The regulation will also provide a voluntary pooling mechanism, under which ships will be allowed to pool their compliance balance with one or more other ships. This pool as a whole must meet the greenhouse gas intensity limits on average. 

The regulation does, however, accept time-limited exceptions for outermost regions, small islands and areas economically highly dependent on their connectivity.

Revenues generated from the regulation’s implementation, or the so-called ‘FuelEU penalties’, will be used for projects supporting shipping’s decarbonisation with an enhanced transparency mechanism.

Jacob K Clasen, deputy director general and deputy CEO of Danish Shipping, said: “This provides shipping companies, investors and fuel producers with something to navigate by so that we can accelerate the green transition.

“There is political momentum in green shipping at the moment. We have just witnessed member states of the UN’s International Maritime Organization (IMO) reach a global climate agreement for shipping. This would not have happened without the efforts and ambitious climate package of the EU, which is now finalised. It will drive investments in green ships and motivate the accelerated production of green fuels for vessels.”

The new regulation will be published in the EU’s official journal after the summer and will enter into force shortly after this publication.

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