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EU adopts green fuel law for shipping

Posted on July 26, 2023

After two years of intense negotiations, the European Union (EU) has agreed on the final rules for climate-neutral shipping, with the adoption of the so-called FuelEU Maritime initiative.

The political agreement means that shipping will be covered by the EU’s emissions trading system (ETS) from 2024 and FuelEU Maritime from 2025, with shipping companies gradually reducing the climate impact of fuels. 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 European and global level,” said Raquel Sánchez Jiménez, Spanish Minister of Transport, Mobility and Urban Agenda.

The main objective of the initiative, as part of the EU’s Fit for 55 package, is to increase the demand for and consistent use of renewable and low-carbon fuels and reduce the greenhouse gas emissions from the shipping sector.

The new legislation aims to put maritime transport on the trajectory of the EU’s climate targets for 2030 and 2050 and should play a fundamental role in delivering on the European climate law.

The new regulation includes measures to ensure that the greenhouse gas intensity of fuels used by the shipping sector will gradually decrease over time, by 2% in 2025 to as much as 80% by 2050.

A special incentive regime will provide support for the uptake of renewable fuels of non-biological origin with a high decarbonisation potential and fossil fuels will be excluded from the regulation’s certification process.

Passenger ships and containers will have to use an onshore power supply for all electricity needs while moored in major EU ports as of 2030.

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, with the pool – as a whole – having to meet the greenhouse gas intensity limits on average

Also, 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.

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

Commenting on the ambitious climate regulations, Jacob 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 United Nations’ 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.”


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