In the future, shipowners will be required to gradually blend in green fuels thereby lowering the GHG intensity. This is the core element of the FuelEU Maritime Regulation which is right now on its way through the political system in Brussels.
In order to ensure that the future rules will actually drive the uptake of new green fuels, Danish Shipping together with the Methanol Institute and World Shipping Council call on decision-makers to encourage those first movers who choose new, more expensive, e-fuels to comply with the regulation and thereby stimulate the demand for those fuels.
”It must pay off to lead the way. E-fuels are far from available in sufficient quantities and thus, it requires extensive planning to ensure supply when bunkering around the globe.”
“Therefore, a mechanism is needed to incentivise the uptake. It must be more attractive to choose the new and more expensive e-fuels, rather than using the relatively cheaper other green, compliant fuels”, says Maria Skipper Schwenn, Executive Director of Climate, Environment and Security at Danish Shipping.
In practice, introducing a “multiplier” mechanism, as suggested by both the European Parliament and the European Commission, would encourage the right market behaviours.
This means, that during a phase-in period a company will be able to comply with Fuel EU Maritime by using a smaller volume of e-fuels compared to other compliant fuels.
The company will be rewarded by making the investment and by driving the demand for the e-fuels. This will result in an increased demand of the new e-fuels and thus stimulate the production of new fuels and make them more accessible.
”By 2030 at least five percent of the world fleet should be operating on green fuels, so it is key that the production is ramped up already in this decade with a view to full decarbonisation by 2050. That is why we need stimulating levers such as the multiplier”, says Maria Skipper Schwenn.
As the production and hence the availability of e-fuels increases, the multiplier should be phased out gradually. Moreover, in order not to weaken the overall reduction requirement, the bar for the reductions should be set higher than the current 75%.
- The Methanol Institute (MI) serves as the global trade association for one of the world’s most vibrant and innovative industries. Working out of every corner of the globe MI is the voice of the world’s leading companies operating across the methanol value chain. https://www.methanol.org/
- The World Shipping Council is the united voice of liner shipping, working with policymakers and industry groups to shape the future growth of a socially responsible, environmentally sustainable, safe, and secure shipping industry. worldshipping.org
- Danish Shipping is a trade and employers’ organization representing more than 90 shipowners in segments covering tank, dry cargo, containers, offshore, ro-ro, passenger transport and more. danishshipping.dk
This article is shared by courtesy of Danish Shipping – www.danishshipping.dk/en/