More than 20 organisations have urged EU lawmakers to close a “regulatory paradox” that could undermine future demand for synthetic marine fuels in a joint letter.
IMAGE: Illustration of vessel with an EU flag. Getty Images
The issue centres on the European Commission’s Delegated Regulation (EU) 2023/1185 and how renewable hydrogen used as an intermediate input in biofuel production is accounted for.
The regulation does not clearly exclude electrolytic hydrogen used in the hydrotreatment of biofuels such as hydrotreated vegetable oil (HVO) from counting towards the synthetic fuel share of the resulting fuel, said the SASHA Coalition, a shipping and aviation industry alliance that signed the letter.
The letter’s immediate target is aviation’s synthetic fuel supply obligation, but the signatories said the same accounting would carry over to shipping.
This could blur the distinction between using green hydrogen as a processing input for biofuels and using it as a feedstock to produce synthetic fuels such as e-methanol and e-ammonia, which require dedicated production facilities.
“This would allow existing biofuel refiners to claim they are delivering e-fuels, without building new synthetic fuel plants,” the letter said.
FuelEU Maritime could mandate a 2% sub-target for synthetic e-fuels from 1 January 2034, if the EU Commission finds that these fuels account for less than 1% of the total energy used by ships covered by the regulation in 2031.
The sub-target would also not apply if the Commission finds that e-fuel production capacity, availability, geographical distribution or prices are inadequate, or if monitoring before 1 January 2033 shows the share is already above 2%.
The signatories argued that leaving the existing provision unchanged in Delegated Regulation (EU) 2023/1185 could allow biofuels produced using green hydrogen to count towards the future synthetic fuel sub-target requirement, potentially reducing demand for dedicated synthetic bunker fuel production.
This could weaken incentives for shipping companies and fuel suppliers to sign the long-term offtake agreements needed to finance new e-fuel projects and reach final investment decisions, the signatories warned.
Green group Transport & Environment (T&E), another signatory, counted 69 e-fuel projects in Europe that could supply the shipping sector, only six of them operational. T&E said allowing this accounting approach could put that pipeline at risk and force the EU to import synthetic fuel to meet its own mandates.
“…allowing this workaround introduces regulatory instability, signaling to market actors that EU rules can be diluted retroactively and opening a Pandora’s box that permanently erodes trust in the long-term predictability of the EU regulatory framework,” the letter read.
The signatories want the Commission to address the issue by applying the same accounting approach it has already adopted for low-carbon fuels.
Delegated Regulation (EU) 2025/2359 excludes renewable fuels of non-biological origin used as intermediate products in the production of conventional fuels and biofuels when calculating the low-carbon share of the final fuel.
The letter called for the same exclusion to be applied to Delegated Regulation (EU) 2023/1185.
By Konica Bhatt and Gautamee Hazarika
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