London — The European Commission has set out new targets for decarbonizing transport, highlighting that aviation and waterborne transportation face greater decarbonization challenges because of a lack of market-ready zero-emission technologies. It comes amid industry concerns about regional climate regulations.
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Maritime transportation and aviation face similar challenges of long development and life cycle of vessels, large investments in refueling equipment and infrastructure and international competition, the EC said in supplementary material to its Sustainable and Smart Mobility Strategy Dec. 9.
In order to improve the energy efficiency and reduce emissions of aircraft and vessels, ambitious standards for their design and operation must be promoted, the main strategy document said, also published Dec. 9.
The EC said the EU must continue to work closely with all international organizations, such as the International Civil Aviation Organization and the International Maritime Organization, on concrete measures aimed at reaching science-based global emission reduction goals consistent with the Paris Agreement.
A variety of future fuels lie before the shipping industry and it is up to global policy makers such as the IMO to ensure shipowners ordering vessels now are not penalized, according to industry experts.
Divergences are likely to emerge in the future, in terms of regulations between different regions and between access to different fuels, and it is up to policymakers to keep the gaps as narrow as possible to see that those who have to act now and take the next important steps for the industry do not suffer for it, industry figures said during S&P Global Platts Mediterranean Bunker Fuel & Shipping virtual conference Nov. 27.
Fresh targets approaching for shipping
The share of alternative, zero and low carbon fuels in waterborne transportation will reach 8-13% of the maritime fuel mix by 2030 and 85-90% by 2050, the commission said in material accompanying the Sustainable and Smart Mobility Strategy.
The EC will propose extending the EU Emissions Trading System to the maritime transportation sector in June 2021.
European shipowners pushed back Sept. 16 on a decision in the European Parliament to draft a proposal to include shipping under the ETS from 2022.
The ETS is due to shift into a higher gear when a fourth trading phase starts in January.
The 16-year-old carbon market has begun to play a more significant role in decarbonizing Europe's economy in recent years, helping prompt a shift from emissions-intensive coal to natural gas and renewable sources for electricity generation.
But in its current form, the system has failed to cut carbon emissions in the industrial sectors at anything approaching the same degree. That may start to change during the next 10-year trading phase, as the market's rules begin to tighten the supply of allowances available to those sectors.
A review of the ETS is due in the second quarter of 2021, so it aligns with plans to cut carbon by 55% by 2030.
The upcoming FuelEU Maritime Initiative is planned to boost production and uptake of sustainable fuels and the EC will consider establishing a Renewable and Low-Carbon fuels Value Chain Alliance, the EC said.
Establishing clean ports and Emissions Control Areas in all EU waters is also a priority, the EC said.
There is currently an ECA in the English Channel, the North Sea and the Baltic Sea, where sulfur content marine fuel emissions there are 0.1%, compared with 0.5% on the high seas.
Tougher carbon pricing for aviation
A large zero-carbon aircraft will be market ready by 2035, the EC said.
Taken as a whole, a basket of measures is needed to decarbonize aviation and global actions remain critical for achieving significant reductions, the commission said.
Carbon pricing will be key. For aviation, the EC will present a proposal to reduce free ETS allowances allocated to airlines. The Commission will also propose implementing the ICAO Carbon Offsetting and Reduction Scheme for International Civil Aviation (CORSIA) through the revision of the ETS Directive in 2021.
The EU ETS covers CO2 emissions from intra-EU flights, while the CORSIA system covers international flights on a global basis.
It is currently cheaper to buy conventional jet fuel and pay for carbon credits than to buy sustainable aviation fuel, one jet fuel market source said.
S&P Global Platts assessed Northwest Europe FOB Rotterdam barges at $414.25/mt Dec. 9, and assessed NWE SAF at $1,584.982/mt.
The ReFuelEU Aviation initiative aims to boost the production and uptake of sustainable aviation fuels, and, as in shipping, the Commission will consider establishing a Renewable and Low-Carbon Fuels Value Chain Alliance.
The EC will propose measures to make airports less polluting, by supplying stationed vessels and aircraft with renewable power instead of fossil energy, for example.
Renewable and low-carbon fuels are projected to account for 3-8% of aviation energy use in 2030 and 63-68% in 2050, the EC said.