European shipowners want EU to triple clean fuel subsidy for shipping
European shipowners want at least 330 million EU carbon allowances set aside to cut the cost of cleaner bunker fuels, three times the 110 million allowance that the European Commission has proposed.
IMAGE: EU flag in front of the Berlaymont building, the headquarters of European Commission. Getty Images
The European Commission included the plan, called the Sustainable Maritime Alternative Propulsion (SMAP) mechanism, in its proposed revision of the EU Emissions Trading System (ETS) in July.
It would give up to 110 million allowances back to shipping companies between 2028 and 2040, to cover part of the extra cost of using cleaner fuels and technologies instead of conventional bunker fuels.
But trade association European Community Shipowners’ Associations (ECSA) said in a study published last week that SMAP would meet only a third of shipping’s needs, leaving a gap of around 220 million allowances over the 13-year period. It called on the EU lawmakers to at least triple the reserve.
Cleaner fuels cost, on average, four times as much as conventional ones, ECSA said.
ECSA also argued shipping accounts for around 10% of ETS emissions but surrenders around 90 million allowances a year, almost 20% of all allowances auctioned. At its assumed price of €100 ($113) per allowance, that comes to around €9 billion ($10 billion) a year.
Unlike some other sectors like steel, cement, chemicals and aviation, shipping has never received free allowances, it said.
Even 330 million allowances would be less than a third of what shipping is expected to surrender under the ETS between 2028 and 2040, according to ECSA.
The group said SMAP could boost demand for cleaner bunker fuels and investment in producing them, but only if the support is large enough and predictable.
SMAP could cut shipping’s emissions by between 1.7 million mt and 9 million mt of CO2 a year by 2035, depending on how much funding it gets, ECSA said, citing the European Commission’s impact assessment report. It would also help shipping companies meet their FuelEU Maritime targets, the group added.
ECSA also wants a wider range of technologies to qualify for SMAP, including energy efficiency projects.
“SMAP can contribute to the energy transition of shipping, but only if it is sized to match the scale of the challenge and covers all technologies that deliver carbon savings,” ECSA Secretary General Sotiris Raptis said.
ECSA’s call follows a letter from campaign group Transport & Environment (T&E) and 15 other companies and organisations, including ferry operator DFDS and bunker supplier Moeve, asking for a significant share of the reserve to be kept for e-fuels, ENGINE reported.
By Nachiket Tekawade
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