ECSA: EU Should Establish Fuel Supplier Incentives for Decarbonization

incentives for fuel suppliers to support decarbonization
(file photo)

Published Feb 16, 2021 4:49 PM by The Maritime Executive

European Community Shipowners’ Associations is calling on the European Commission to establish a system of incentives and targets for the marine fuel suppliers to support achieving the goals of decarbonization. According to the organization the EC needs to address the fuel suppliers in its efforts as they lead the market with ships being the user of the products made available to them.

In proposals submitted to the EC Commission as part of the public consultation on the revision of the EU ETS and the Renewable Energy Directive, the ECSA says a global approach must be the cornerstone of the EU’s policies and any regional measures would risk undermining the international negotiations at the IMO level. The ECSA says the shipping industry is committed to decarbonization, but that success hinges primarily on the introduction of zero- or low-emission, safe and widely available alternative fuels, which do not yet exist.

“Introducing the right incentives and requirements for fuel suppliers in order to make low- and zero-carbon fuels for shipping available in the market is a prerequisite for the decarbonization of the sector,” said Martin Dorsman, ECSA Secretary-General. “As with the uptake of all new fuels, the chicken-and-egg dilemma can only be addressed by the introduction of appropriate requirements for fuel suppliers.” 

The shipowners’ association is calling on the EC to address fuel supplies by introducing sub-targets to make low- and zero-carbon fuels available for shipping and by increasing the multiplier for renewable fuels used in the maritime sector under the Renewable Energy Directive (RED). Further, they believe a fuel standard as a requirement for ships instead of fuel suppliers under the FuelEU Maritime proposal would risk failing to deliver emissions reductions and would be challenging to enforce. If a Market Based Measure (MBM) is introduced, a fund could invest the revenues to support the uptake of these fuels.

“A fuel standard should be geared towards fuel suppliers and not ships, which are merely the fuel users,” says Dorsman. “We are quite concerned that should the FuelEU Maritime put forward a fuel standard as a requirement for ships, such a measure would seriously disrupt the bunkering market and would be challenging to enforce. More importantly, it would fail to incentivize energy efficiency improvements, be they technical (wind propulsion assistance, heat recovery system, hull, and propeller optimization, etc.) or operational (route optimization, slow steaming, etc.).”

ECSA advocates a two-pronged approach that includes incentives and requires fuel suppliers to include a certain percentage of low- and zero-carbon fuels in their offering by introducing sub-targets and a higher multiplier for low- and zero-carbon fuels under RED. Also, they are proposing establishing a fund under an MBM and using the revenues to finance R&D projects and to bridge the price gap between new and conventional fuels.

A fund under an EU MBM would also minimize the administrative burden for the sector and would make sure that all revenues are invested in its energy transition according to the ECSA’s proposal.