EU’s €30bn Shortfall Threatens Shipping’s Green Transition
ECSA study reveals the European Commission’s proposed 110m ETS allowances cover just a third of the funding needed for.
The European Union’s plan to support sustainable maritime fuels and technologies faces a €30 billion funding gap, according to a new study by the European Shipowners (ECSA). Sustainable Maritime Alternative Propulsion (SMAP) Propulsion (SMAP) mechanism, designed to reinvest part of shipping’s contributions to the EU Emissions Trading System (ETS), currently falls short of what is needed to drive the sector’s energy transition.
The study, conducted by ECSA, reveals that the European Commission’s proposal to allocate 110 million ETS allowances to SMAP is insufficient. The mechanism requires at least 330 million allowances, equivalent to €30 billion, to create a viable market for sustainable maritime fuels and technologies.
Shipping, responsible for around 10% of emissions covered by the EU ETS, contributes nearly 20% of the system’s total revenues. Unlike other sectors, however, it has never received free allowances under the ETS. The SMAP mechanism was introduced as a means to reinvest part of these contributions into the industry’s decarbonisation efforts, but the current proposal covers only a third of the identified need.
Commission’s (eliminar como nombre propio) a Third of Requirements: sustainable maritime fuels
“Shipping pays almost 20% of the total ETS revenues, although it is responsible for 10% of the emissions covered by the ETS. Unlike other sectors, it has never received a single free allowance. The new ETS mechanism that earmarks part of these revenues offers an opportunity to support shipping’s energy transition. However, the Commission proposal covers only a third of what is needed to help create a market for clean fuels and tech.
The European Parliament and the Council must at least triple the earmarked ETS revenues in SMAP to provide a credible market signal for the scale-up of sustainable maritime fuels and technologies, including energy efficiency projects. SMAP can contribute to the energy transition of shipping, but only if it is sized to match the scale of the challenge and covers all technologies that deliver carbon savings.”
Sotiris Raptis·Secretary General of European Shipowners | ECSA
ECSA is calling on the European Parliament and the Council to triple the ETS revenues earmarked for SMAP. The association argues that this increase is essential to meeting the FuelEU Maritime initiative’s 2040 target, which aims to accelerate the adoption of sustainable fuels and technologies across the sector.
The study emphasises that SMAP funding must cover all sustainable fuels and technologies, including those focused on energy efficiency. This comprehensive approach is necessary to ensure that the mechanism delivers meaningful carbon savings and supports the sector’s long-term sustainability objectives. The current proposal, however, limits the scope of support, potentially leaving critical projects without the financial backing they require.
The SMAP mechanism was introduced as part of the EU’s broader strategy to decarbonise the maritime sector. By reinvesting a portion of the revenues generated from shipping’s ETS contributions, the mechanism aims to create a market for sustainable fuels and technologies, making them more accessible and affordable for industry players.
(eliminar como nombre propio) to Meet 2040 Targets
ECSA’s call for tripling the SMAP funding reflects the urgency of the situation. The study’s findings underscore the need for decisive action from EU policymakers to ensure that the maritime industry can transition to a low-carbon future.
The European Parliament and the Council now face a critical decision. The outcome of their deliberations on SMAP funding will determine whether the mechanism can effectively support the maritime sector’s energy transition. With the 2040 deadline looming, the stakes could not be higher for an industry that plays a pivotal role in global trade and the EU’s climate ambitions.
For the maritime sector, the path to decarbonisation is fraught with challenges, but the SMAP mechanism offers a lifeline. By ensuring that the funding matches the scale of the challenge, the EU can provide the necessary support to drive innovation, reduce emissions, and secure a sustainable future for shipping. The ball is now in the court of policymakers to deliver on this promise.
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