Renewable ethanol producers take EU to court over bio-bunker policy

European renewable ethanol producers have launched a legal challenge to the European Union's FuelEU Maritime regulation, arguing it fails to recognize the benefits of sustainable first-generation crop-based biofuels.

The producers argue that this violates several key EU legislative procedures, European renewable ethanol producers' group ePURE said in a statement Jan. 31.

The court case comes amid growing interest in using biofuels for marine propulsion, as climate targets get ever tougher and shipping companies look for decarbonization pathways that minimize expense, such as engine replacements.

As part of FuelEU Maritime, Brussels has extended its Emissions Trading Scheme to cover maritime transport as of 2024 and the EU will tighten the greenhouse intensity of bunker fuels used in EU-related trades through FuelEU Maritime rules from 2025.

Companies representing nearly all of the EU's production of renewable ethanol are seeking to annul a section of the EU legislation that considers first-generation crop-based biofuels to have the same emission factors as the least favourable fossil fuel pathway. As a result of that provision, the FuelEU Maritime Regulation effectively excludes Renewable Energy Directive (RED)-compliant crop-based biofuels from the decarbonization objectives of the maritime sector.

"The EU's patchwork approach to crop-based renewable ethanol... is more than just discriminatory. It also jeopardises the EU's ability to meet ambitious decarbonisation targets," David Carpintero, Director General of ePURE, said in the statement.

The legal action is based on several arguments. These include, among others, that the European Parliament and the Council committed a manifest error of assessment by failing to rely on scientific and technical data in preparing their policy on the environment. Additionally, that they violated the principle of proportionality by deeming RED compliant crop-based biofuels to have the same emission factors as the least favorable fossil fuel in the maritime transport. The producers also argue the EU violated the principle of equal treatment because the methodology used to calculate GHG intensity of the energy used on board ships is not consistent with the RED's biofuel GHG emission calculation.

The legal application for annulment was filed with the General Court of the European Union Dec. 18. The challenge was filed by members of ePURE and Pannonia Bio Zrt.

According to a study published by Denmark's Maersk Mc-Kinney Moller Center for Zero-Carbon Shipping on Jan. 29, the ETS and FuelEU Maritime can increase the fuel cost for ships running on very low sulfur fuel oil by 100% by 2030 and by more than five times by 2050.

Platts, part of S&P Global Commodity Insights, assessed bio-bunker fuel B30 UCOME, a second-generation fuel, at Rotterdam at $794/mt Jan. 30, compared with $578/mt for delivered 0.5% sulfur fuel oil.

Platts assessed ethanol T2 FOB Rotterdam barges at Eur611.5/cu m ($663.80/cu m).

In 2030, alternative bunker fuels excluding LNG and LPG will account for 2.2% of total global bunker demand of 328 million mt, according to their Reference Case, analysts at S&P Global said in December, adding that of these alternative fuels, biofuel will account for 6.2% of demand, compared to 34.3% methanol and 16.8% hydrogen.