FuelEU & ETS Analysis: What can the industry learn and adopt from regional regulations?

Published — June 16, 2022

What can the industry learn and adopt from regional regulations?

Deep-diving on two EU regulatory proposals for the maritime industry

Key takeaways

  • Even the combined effect of ETS (at current levels) and FuelEU Maritime will not take us to full decarbonization by 2050, and the emissions reductions will be slow to kick in
  • In their current wording the two initiatives could lock in LNG/Methane as the dominant fuel – which may become very expensive for the end-consumer in the long run
  • Dual-fueled ships are attractive investment options already today as these ships can change fuel according to compliance levels needed, fuel availability and operating cost
  • However, dual-fueled vessels may be encouraged to occasionally breach FuelEU and pay a penalty if always picking the cheapest fuel available. Many dual-fuel strategies that qualify from a compliance perspective also prove to be sub-optimal emission reduction strategies compared to what is technically possible
  • An ETS well-to-wake approach could lead to significant additional emissions reductions by accelerating alternative fuel uptake
  • Changing the baseline from LFSO to LNG will accelerate the emissions reductions significantly
  • Alternatively, the intensity reduction targets can be brought forward or steepened