European shipowners: Shipping should be given ‘priority access’ to clean fuels

Reflecting on the recently published Draghi report, European Community Shipowners’ Associations (ECSA) have presented in a position paper their recommendations to support the uptake of clean fuels in shipping.

The report by Mario Draghi—former European Central Bank President— identifies shipping as one the most difficult sectors to decarbonize, requiring annual investments of €40 billion.

It stresses that building a supply chain for alternative fuels is critical for the EU to meet its climate targets.

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. The Draghi report identifies the development of a supply chain for green 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.

To accelerate the production and uptake of alternative 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 decarbonization 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 highlights that shipping is one of the most difficult sectors to decarbonise requiring nearly 40 billion euros 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,” Sotiris Raptis, ECSA Secretary General, pointed out.

“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.”

Coinciding with the release of the Draghi report, ECSA, together with FuelsEurope, eFuel Alliance, EWABA, HydrogenEurope, and Methanol Institute have established a new Clean Maritime Fuels Platform, an industry initiative aiming to enhance communication between the shipping sector and fuel producers.

As informed, as a bottom-up industry initiative, the Clean Maritime Fuels Platform will seek to enhance communication between the shipping sector and fuel producers and to identify common challenges and possible solutions, considering the implementation of the Fit for 55 package and the transition to a net-zero economy by 2050.