FuelEU Maritime: Fuels for Sustainable Shipping

POSITION | MOBILITY UND LOGISTICS | MARITIME TRANSPORT

FuelEU Maritime: Fuels for Sustainable Shipping Recommendations of the German Industry for the Regulation

13 October 2022 Promote decarbonisation of maritime shipping in a competition-neutral and technology-open manner The European Commission's FuelEU Maritime initiative aims to put maritime shipping on track for the climate targets of the European Union. To this end, the Commission proposes a continuous reduction in the greenhouse gas intensity of maritime transport on journeys between two EU ports, between EU ports and third ports and during the stay in an EU port. The BDI welcomes the European Commission's predominantly technology-open approach for the decarbonisation of maritime shipping.

To exploit the decarbonisation potential of maritime shipping, the technology-open approach and the ambitious targets of FuelEU Maritime must be maintained. A rapid market ramp-up of alternative fuels is the prerequisite for realising the greenhouse gas reduction targets of maritime shipping.

Furthermore, a sub-quota for RFNBOs in intra-European shipping, the earmarking of sanction payments for the financing of the market ramp-up of sustainable fuels and propulsion technologies in the maritime sector as well as the introduction of flexibility mechanisms for the unbureaucratic crediting of sustainable fuels are necessary. This results in investment security for the producers of sustainable fuels, which promotes the market ramp-up of alternative fuels across all modes of transport. Carbon leakage and distortions of competition must be prevented via a competition-neutral design of the regulation.

Recommendations for FuelEU Maritime ▪ Maintain a technology-open approach and use the potential of bridging technologies: The "well-to-wake" approach outlined in FuelEU Maritime captures the greenhouse gas emissions of propulsion technologies over their entire life cycle. This approach must be maintained to enable the use of the most technologically suitable options in the diverse application areas of maritime shipping and to exploit the potential of emission-reducing bridge technologies.

▪ Align GHG reduction targets with EU climate targets and introduce sub-quota for RFNBOs: FuelEU Maritime's GHG reduction targets for intra-European shipping should remain aligned with the EU's climate targets. The introduction of an ambitious but at the same time realistic sub-quota

FuelEU Maritime: Fuels for Sustainable Shipping

for RFNBOs in intra-European shipping supports for the decarbonisation of maritime shipping and creates investment security for market operators.

▪ Promote a level playing field and prevent carbon leakage: BDI rejects more ambitious quotas for shipping between EU member states and third countries to prevent carbon leakage and to exacerbate the disadvantage for the European maritime industry and its customers in international competition through FuelEU Maritime. Bunkering of fuels outside the EU must be prevented. Further steps should be taken in direct cooperation with the International Maritime Organisation (IMO) to secure an international level playing field.

▪ Extend scope to smaller ships and allow pooling: Extending the scope to ships with a gross tonnage of less than 5,000 GT allows the decarbonisation potential of smaller ships to be tapped and strengthens the level playing field within the European Union. A pooling mechanism - the application of greenhouse gas reduction targets to the entire fleet instead of individual ships - already provides incentives for investments in innovative propulsion technologies and should therefore be made possible.

▪ Use sanction payments to finance the market ramp-up of alternative fuels and the promotion of sustainable propulsion technologies: The proceeds from sanction payments for violations of FuelEU Maritime must be used to finance the market ramp-up of renewable and low-carbon fuels, the development of related infrastructure such as bunkering facilities and shore power in ports as well as the promotion of sustainable propulsion technologies via the Ocean Fund or alternative funding pots.

▪ Introduce flexibility mechanism for placing alternative fuels on the market: The provision of sustainable and low-carbon fuels at EU ports is costly, especially at the beginning of the market ramp-up phase. Therefore, by 2025, a delegated act of the Commission should introduce a book and claim system that enables the use, distribution, and sale of alternative fuels in a cost-efficient and flexible way. This can be done by trading certificates for sustainable fuels, similar to green electricity certificates. In this way, fuels could also be booked via a European and, in the future, worldwide book & claim system to avoid costly fuel transports and to set broad market impulses.

▪ Ensure infrastructure development in ports and enable self-sufficiency of ships beyond 2030: The expansion of refuelling and charging infrastructure and the availability of sustainable fuels in ports, must be ensured and precede demand. In addition, the energy supply of ports must be prepared for a shore-based power supply to ships. The ETD and the AFIR must contain flanking and coherent measures for this. Self-sufficiency of ships berthed in ports using climate-neutral fuels and advanced exhaust gas control systems (near zero emission technologies) should be made possible beyond 2030.

▪ Define zero-emission technologies and emission factors technology-open: For fair competition between the alternative energy sources listed in Annex II of the regulation, they must take into account the greenhouse gas emissions generated in production. A blanket definition of the emission factor for electricity as "zero" fails to consider the diversity of the electricity mix and should be rejected. Therefore, the emission factor of the energy source used must also be implemented in Annex III as an essential criterion for defining the sustainability of a transport mode when defining zero-emission technologies.

Add a review clause: A review clause in the regulation obliges the EU Commission to develop a mechanism effectively preventing carbon leakage and distortions of competition from 2030 onwards.

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FuelEU Maritime: Fuels for Sustainable Shipping

Imprint Bundesverband der Deutschen Industrie e.V. (BDI) Breite Straße 29, 10178 Berlin www.bdi.eu T: +49 30 2028-0 German Lobbyregister Number: R000534

Editors Marianne Berg-Letzgus Senior Manager Mobility and Logistics T: +32 2 792 1009 m.berg-letzgus@bdi.eu Marco Kutscher Senior Manager Mobility and Logistics T: +49 30 2028 1751 m.kutscher@bdi.eu

BDI Publication Number: D 1662

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