Maritime regulatory frameworks such as FuelEU Maritime and the EU Emissions Trading System (EU ETS) need to harmonise their emissions accounting methods to accelerate the shipping sector's adoption of new low-emissions drop-in fuels, according to a new study by the Mærsk McKinney Møller Centre for Zero Carbon Shipping (MMMCZCS). Both measures are now in effect for the sector — the EU ETS was extended to cover maritime emissions from January 2024, and FuelEU Maritime's limits on ship fuel greenhouse gas intensity apply from January 2025 — making the interaction between the two frameworks increasingly consequential for shipowners trading to and from European ports.

The study highlights that current supplies of widely adopted drop-in fuels — including FAME (fatty acid methyl esters) and HVO (hydrotreated vegetable oil), both covered under the fuel quality standard ISO 8217:2024 — are insufficient to meet the shipping industry's energy demands. Drop-in fuels can be used in existing marine engines and fuel infrastructure without modification, making them a potential near-term decarbonisation pathway for a sector with limited commercially ready alternatives. This supply gap opens opportunities for newer drop-in fuels such as pyrolysis oil, hydrothermal liquefaction oil, and cashew nutshell liquid (CNSL), none of which are currently addressed by the ISO standard.

MMMCZCS maps each stage of the adoption process, from initial market research through to large-scale deployment, identifying obstacles and recommending improvements. The centre found that the adoption pathway remains unclear, fragmented, and time-consuming, with roles often poorly defined among the various stakeholders involved.

A fundamental challenge, the report notes, is that different regulatory frameworks count fuel emissions in fundamentally different ways. FuelEU Maritime uses a well-to-wake approach, accounting for emissions across a fuel's entire lifecycle — from feedstock production through to combustion on board a vessel. By contrast, the EU ETS prices only the emissions released from burning fuel on board. Meanwhile, the IMO's Net-Zero Framework has not yet been adopted by member states, leaving its scope uncertain. The IMO revised its greenhouse gas strategy in July 2023 to target net-zero emissions from international shipping by or around 2050, but the specific mid-term measures — including a fuel emissions standard and a possible economic mechanism — remain under negotiation at successive sessions of the Marine Environment Protection Committee (MEPC).

The frameworks also diverge on sustainability and eligibility criteria for fuels and feedstocks, taking differing approaches to indirect land-use change, waste definitions, and negative emissions. According to MMMCZCS, these regulatory inconsistencies can result in a fuel qualifying under one framework while being excluded under another, creating confusion for shipowners and fuel suppliers.

To address this, the study recommends aligning life cycle assessment (LCA) methodologies and penalty structures across the various frameworks. Such harmonisation, MMMCZCS argues, would reduce uncertainty for stakeholders deciding whether to begin the adoption process for new drop-in fuels.

Source: By Nachiket Tekawade, ENGINE,