Shipowners challenge green fuels’ inclusion in truck CO2 standards

Scarce e-fuels and sustainable biofuels should be reserved for hard-to-decarbonise transport modes such as shipping, rather than going to trucks and buses where electrification is a viable option, shipowners argue.

The European Community of Shipowners’ Association (ECSA), a trade group representing 20 national associations of shipowners from the EU and Norway, issued the statement ahead of a European Parliament vote on Tuesday (21 November) in which lawmakers will decide on new rules to reduce emissions from heavy-duty vehicles.

Under the Parliament’s draft position, as voted on in the assembly’s environment committee, manufacturers would be obliged to reduce average fleet emissions of new heavy-duty vehicle by 45% in 2030, 70% in 2035, and 90% in 2040.

But shipowners are worried about attempts to include an amendment in the text that would see the amount of alternative fuels in Europe’s fuel mix count towards the new CO2 standards.

Under the so-called Carbon Correction Factor (CCF) mechanism, the percentage of the petrol and diesel mix from renewable sources would be deducted from the carbon emissions calculated for new diesel trucks under the CO2 rules.

For example, if 10% of Europe’s fuel mix is made up of biofuels and e-fuels and 90% fossil fuels, that 10% would be deducted from the CO2 targets for trucks as already achieved.

The CCF mechanism is strongly supported by fuelmakers, particularly the biofuels and e-fuels industries, who argue that CCF better reflects the actual carbon emissions of heavy-duty vehicles.

However, shipowners say that inclusion of the CCF will lead to confusion in the market and will result in “unnecessary additional incentives” for alternative fuels in the road transport sector.

While the CCF was ultimately rejected at committee level, there is speculation that it will be reintroduced during the plenary session, in which all MEPs can vote on the law.

“We believe that the introduction of CCF will generate an artificial demand for [alternative] fuels in road transport where other alternatives exist and will divert crucial quantities away from shipping and other hard-to-abate sectors, which have no other alternatives to decarbonise,” the ECSA said in a statement.

“In order for the shipping industry to meet its ambitious decarbonisation targets, clean fuels must be made available in the market in sufficient quantities and at an affordable price,” the statement adds.

The Council of the EU, which represents the bloc’s 27 member states, has already rejected the CCF despite support from a coalition of countries including Italy, Czechia, Slovakia, and Poland. This means the Parliament plenary vote is the last chance for the inclusion of the mechanism in the text.

Both e-fuels, which are derived from green hydrogen, and advanced biofuels made from wastes and residues, are available in very limited quantities, making them much sought after as a means to reduce transport emissions.

The low supply and high demand have led to worries that competition will emerge among sectors for control of green fuels, particularly as both the maritime and aviation sectors are legally obliged to decrease their use of fossil fuels.

The statement from ECSA reflects a belief among maritime and aviation companies that e-fuels and advanced biofuels should be withheld from the road sector, which can turn to electrification as a way of cutting emissions.

While electric aircraft and ships exist, current models are capable of only very short trips, making them unsuitable for most commercial purposes.

In September, Carsten Spohr, the CEO of German national carrier Lufthansa, criticised Berlin’s insistence on permitting the sale of cars run solely on e-fuels after 2035, arguing that these fuels will need to be prioritised to cut emissions from aircraft.

‘Market ramp-up’

In contrast to the maritime sector’s insistence that CCF would harm the decarbonisation of hard-to-abate transport modes, the mechanism was strongly defended by the eFuels Alliance, an organisation representing companies from the oil and automotive sector aiming to boost the use of synthetic fuels.

Ralf Diemer, the managing director of the eFuel Alliance, told Euractiv that the CCF would actually improve the market for e-fuels across the board.

“If fuel producers need to produce sufficient quantities of renewable fuels for aviation and shipping, we need road transport as a lever for the market ramp-up,” he said.

“Otherwise, the production of eKerosene or eMethanol will create by-products, for instance eDiesel, that will not find a market. This reduces the attractiveness of investments and postpones the current problem that e-fuels are hardly available even after 2030,” he added.

Diemer also stressed that EU legislation, such as FuelEU Maritime and ReFuelEU Aviation, already incentivises the production of synthetic fuels for the maritime and aviation sectors, with the CCF providing “another market option to support a cross-sectoral uptake of eFuels”. 

Following the finalisation of the Parliament’s position next week, negotiations with member states will commence to finalise the CO2 standards for heavy-duty vehicles regulation.

[Edited by Frédéric Simon/Nathalie Weatherald]

Read more with EURACTIV