To achieve FuelEU Maritime’s 2025 targets, the industry must reduce 2.4 million tonnes of CO2 equivalent (CO2eq). The current reliance on biodiesel and LNG could cover up to 90% of the needed reductions, though biodiesel supply constraints and price uncertainties pose challenges. Compliance strategies include diversifying fuel options, investing in dual-fuel vessels, and considering advanced alternatives like e-fuels. The estimated cost of compliance is $350 million in 2025, potentially rising to $1.7 billion by 2030, reports Zero Carbon Shipping.
FuelEU Maritime Targets
In looking ahead at FuelEU Maritime’s impact on the industry, analysis shows that achieving the 2025 targets will require a reduction of 2.4 million tonnes of CO2 equivalent (CO2eq). The current maritime fuel mix, including liquefied natural gas (LNG) and biodiesel, is projected to cover up to 90% of the needed reductions. While biodiesel remains a cost-effective option, its future prices are uncertain due to limited feedstock availability and competition from other sectors.
To estimate the necessary reductions, emissions data from 2023 for all 13,000 vessels visiting EU ports was analyzed using the EU Monitoring, Reporting, and Verification (MRV) database. The analysis converted tank-to-wake (TtW) CO2 data into well-to-wake (WtW) greenhouse gas (GHG) emissions regulated by FuelEU, accounting for upstream emissions and additional GHGs like nitrous oxide (N2O) and methane (CH4). After adjusting for voyages to non-EU ports, it was determined that 97.9 million tonnes of GHG emissions, derived from 26.4 million tonnes of fuel, will fall under FuelEU regulation, necessitating the reduction of 2.4 million tonnes of CO2eq by 2025.
Biodiesel, increasingly used to meet both regulatory and voluntary decarbonization goals, can be blended with fuel oil for conventional engines. LNG, while providing limited emissions reductions, is also being used by vessels equipped for it. Rotterdam’s 2023 bunker sales, the largest in Europe, were used to gauge current abatement levels, with B30 biodiesel blends making up 7% and LNG 3% of the total 10 million tonnes sold. Extrapolating these figures suggests that the industry will demand 0.7 million tonnes of LNG and 2 million tonnes of B30 blend in 2025, equivalent to 600,000 tonnes of pure biodiesel.
Supply constraints for biodiesel remain a concern due to competition from other sectors and quality issues with feedstocks like used cooking oil. However, increased supply from ports like Singapore and Algeciras-Gibraltar could help meet rising demand. Additionally, stricter guidelines may limit the use of biodiesel marketed as emission reductions towards FuelEU compliance, potentially increasing demand for additional biodiesel volumes.
The current use of B30 biodiesel and LNG could cover 90% of the required CO2eq reductions for 2025-2029, but only 35% of the reductions needed by 2030. Compliance options such as biomethane, onshore power, wind-assisted propulsion, borrowing from future compliance years, or paying penalties offer alternative pathways to meeting FuelEU targets.
The total cost of achieving the 2.4 million tonnes of CO2eq reduction is estimated at $350 million in 2025, rising to $1.7 billion by 2030. While spending on FuelEU compliance is lower than for EU Emissions Trading System (ETS) allowances, it can directly benefit ships using alternative fuels through the pooling mechanism. The regulation also encourages investment in advanced alternatives like e-fuels, with the potential to lock in supply through offtake agreements.
Biodiesel prices are expected to vary significantly due to uncertainties in feedstock availability and the impact of sustainability and GHG requirements. Supply constraints are likely as other sectors, including aviation and heavy-duty trucking, increase their consumption of biofuels. For companies concerned about the rising cost of biodiesel, investing in dual-fuel vessels with the option to use e-fuels may be a prudent strategy.
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Source: Zero Carbon Shipping
