WSC: EU needs ‘true’ measure to lower renewable fuels price and spearhead maritime decarbonization

Both renewable-capable vessels and renewable fuels could be available to meet EU 2030 targets but the price gap between fossil and renewable fuels is the major barrier to making decarbonization a reality, new research published by the World Shipping Council (WSC) found.

As explained, without effective regulations, the high price of renewable marine fuels limits and/or delays production. While the number of renewable fuel-capable vessels is increasing and fuel availability is improving, pricing remains the primary obstacle to scaled production and widespread adoption.

The research, titled “WSC EU Shipping Decarbonisation Report – Can the EU Fuel Shipping’s Decarbonisation?”, provides a comprehensive analysis of shipping’s transition to renewable fuels in the EU.

“Investment in new containerships and vehicle carriers is accelerating. Today, about 200 liner vessels are already capable of running on renewable fuel, with an additional 700 vessels hitting the water by 2030. However, to deliver on their potential for GHG reductions, these ships need renewable fuels to be both available and commercially viable,” Joe Kramek, President & CEO of the World Shipping Council, commented.

“Some may be surprised to read that renewable fuel supply, particularly in Europe, is no longer hypothetical, it is on its way to becoming a reality.”

“However, with bio-methane priced 169% higher than fossil LNG, bio-methanol 469% more expensive than VLSFO, and e-methanol costing 626% more, these fuels will remain commercially unviable without targeted regulatory measures.”

“Carriers and fuel providers are clearly committed and investing in vessels and fuel production in anticipation of regulation, putting shipping on track to reach its 2050 decarbonisation goal and 2030 targets. To stay on track and actually reach the net-zero goal, we rely on regulators to show the same commitment in putting in place effective measures that will make it possible for renewable maritime fuels to compete with fossil fuels,” Kramek pointed out.

Key findings:

• Projected fuel demand by 2030: Global vessels on order will require 14.4 million tonnes oil equivalent (Mtoe) of methane, 7 Mtoe of methanol, and 0.7 Mtoe of ammonia.
• EU renewable fuel production: While EU production of renewable fuels is growing, it remains unclear how much will be allocated to marine use.
• Renewable fuel supply potential: Optimistic projections suggest adequate supply to meet the FuelEU decarbonization targets by 2030, but commercial viability hinges on regulation that narrows the cost gap between fossil and renewable fuels.
• Cost barrier: Bio-methane: 169% more expensive than fossil LNG. Bio-methanol: 469% more expensive than very low sulphur fuel oil (VLSFO). E-methane: 560% more expensive than VLSFO. E-methanol: 626% more expensive than VLSFO.

With the International Maritime Organization (IMO) set to discuss global greenhouse gas (GHG) fuel standards and pricing mechanisms next month, WSC has underscored the EU’s crucial role in shaping ambitious regulations to bridge the price gap.

The report recommends that the EU aligns regional policies with global regulations to ensure fair competition and prevent market distortions; establishes well-to-wake, performance-based fuel standards that reflect actual emissions reductions; implements “a true” GHG pricing mechanism that funds a cost-for-difference model to incentivize renewable fuel adoption, possibly funded by ETS revenues; implements fuel certification systems that ensure global supply of truly renewable marine fuels.

“Switching from fossil fuels to renewable energy to power the engine of global trade will take time and require massive investments. We are off to a good start, and with ambitious regulation we can move together to make sure we meet the needs of our climate, while maintaining commercial sustainability,” Joe Kramek concluded.

In related news, the so-called Draghi report—published in September 2024—addresses European competitiveness and the future of the European Union. Among other things, the report recognizes that shipping together with aviation, are the most difficult sectors to decarbonize. Investment needs for shipping alone will be around €40 billion each year from 2031 to 2050. Scaling up the production of clean fuels and clean and innovative technologies in Europe has been recognized as a major objective. In this regard, the report identifies the need for adequate access to finance, including special calls for shipping under the ETS Innovation Fund.

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