EU ETS currently lacks ability to make green fuels competitive with conventional fuels - Getting to Zero Coalition

Including shipping in the EU Emission Trading System (EU ETS) will narrow the price gap between conventional and greener fuels, but not enough to bring them to parity, the Getting to Zero Coalition says.

PHOTO: Aerial view of the Europoort area in the Port of Rotterdam. Getty Images

The Getting to Zero Coalition recommends using a portion of the revenue generated from EU ETS to fund Contracts for Difference (CfD) programmes to incentivise private investment in green fuels production.

It argues that green fuel production technologies are at the initial stages. Current suppliers can only produce small volumes at a high cost, a drawback against more cost-efficient conventional fuels.

An CfD scheme allows a public sector or administrative entity to meet the difference between the market price of fuel or technology.

Getting to Zero Coalition claims CfD programmes can easily fund 5% of green fuel production, which can be covered by EU ETS revenue that is estimated to amount to around $5-10 billion annually.

The coalition says CfD programmes should be designed to boost the production of green fuels such as hydrogen that have long-term environmental advantages.

Earlier this year, the Port of Rotterdam and Danish Shipping highlighted loopholes in the EU ETS system.

The ETS is part of the EU’s Fit For 55 policy to reduce net greenhouse emissions by at least 55% by 2030. A final EU vote on the EU ETS amendments is expected in June this year.

Getting to Zero Coalition is a partnership between Global Maritime Forum and World Economic Forum. The alliance works with a range of organisations and companies to accelerate decarbonisation in the shipping industry.