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EU rules set to boost LNG in new trucks could apply in July

Brussels — EU rules setting binding limits on CO2 emissions from new heavy-duty trucks could enter into force in July, paving the way for LNG demand from such trucks to reach an estimated 1.1 million mt of oil equivalent by 2025.

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The European Parliament's website showed the final act of the draft rules was signed on June 20. Publication in the Official Journal usually follows within weeks, and they enter into force 20 days after that.

The rules require new trucks to emit 15% less CO2 on average by 2025, and 30% less from 2030.

The European Commission has estimated the curbs could more than double LNG demand from trucks by 2025 compared with 500,000 mtoe in a baseline scenario.

By 2030, the curbs could more than triple LNG demand from trucks to 4.4 million mtoe, up from 1.3 million mtoe in a baseline scenario, according to EC estimates.

Diesel would still dominate the truck market in 2030 however, with estimated demand of 64.5 million mtoe.

But the EC estimated that would be nearly 10% lower than the 71.4 million mtoe projected in a baseline scenario without emission curbs.

Overall, the curbs could save 170 million mt, or 1.24 billion barrels, of oil over the next two decades, according to the EC.

The new rules, first proposed by the EC in May 2018, are part of the EU's wider efforts to decarbonize its economy by 2050.

Gas vs coal plant boost

Separate CO2 limits on power plants receiving capacity payments enter into force on July 4 as part of the EU's power market design regulation, boosting prospects for gas-fired plants over coal.

All power plants starting commercial production on or after July 4 face an immediate CO2 limit of 550 g CO2/kWh for taking part in capacity remuneration schemes, unless they have commitments or contracts with governments concluded before the end of this year.

Existing plants emitting more than 550 g CO2/kWh can continue to receive capacity payments until June 30, 2025, and even after that if they emit less than 350 kg CO2, on average, per year per installed kW.

These limits mean existing coal and lignite plants will have to reduce their operating hours significantly from July 1, 2025, to continue to receive capacity payments.

EU energy regulatory agency ACER has to provide technical guidance on how to calculate power plant emissions by January 5, 2020.

-- Siobhan Hall, siobhan.hall@spglobal.com

-- Edited by Dan Lalor, daniel.lalor@spglobal.co