The EU Council has approved new regulations aimed at reducing carbon emissions in the maritime industry by encouraging the use of renewable and low-carbon fuels. Under the new legislation, the greenhouse gas intensity of fuels used in the shipping sector will gradually decrease from 2% in 2025 to as much as 80% by 2050. The regulation also includes an incentive scheme to promote the uptake of renewable fuels of non-biological origin.

The FuelEU Maritime Initiative is part of the EU's "Fit for 55" package, which aims to achieve a 55% reduction in greenhouse gas emissions by 2030. This package is a core component of the European Green Deal and REPowerEU, the EU's climate and energy policy response to Russia's invasion of Ukraine.

Currently, the shipping industry accounts for around 3% of global greenhouse gas emissions, with most ships relying on diesel engines. The new regulations send a clear signal to the sector to shift away from fossil fuels and embrace greener alternatives.

As part of the new rules, fossil fuels will be excluded from the certification process, and passenger ships and containers will be required to use onshore power supplies for all electricity needs while moored in major EU ports from 2030 to reduce pollution in urban areas near ports.

The revenues generated from penalties under the FuelEU regulation will be used to fund projects supporting the decarbonization of the maritime sector.

The new rules will take effect from January 1, 2025, with certain provisions for biofuels applying from August 31, 2024. The legislation considers biofuels and biogas to have the same emission factors as the least favorable fossil fuel pathway for this type of fuel.

Earlier this month, the International Maritime Organization (IMO) adopted a new strategy for reducing greenhouse gas emissions, including a commitment to achieve net-zero emissions by 2050 and the uptake of alternative zero and near-zero carbon fuels by 2030. These global efforts align with the EU's push for sustainability in the maritime industry and mark a significant step towards decarbonization. IMO Secretary-General Kitack Lim emphasized that the adoption of the 2023 IMO Greenhouse Gas Strategy is a crucial milestone in the journey towards maritime decarbonization, but there is still much work to be done in the years and decades ahead.