EU Maritime Regulations Boost Methanol’s Competitive Edge Against Fossil Fuels

The Methanol Institute’s white paper suggests that the EU’s FuelEU Maritime and EU Emissions Trading System (EU ETS) could level the playing field for bio- and e-methanol, making eco-friendly fuels more economically competitive against fossil marine fuels. With significant penalties for using fossil fuels, these regulatory frameworks could effectively encourage the transition to sustainable fuels, particularly methanol, in the maritime industry. This shift could help the industry move closer to its net-zero emissions target by 2050.

FuelEU Maritime is a significant initiative by the EU aimed at reducing greenhouse gas emissions from shipping. It applies to vessels over 5,000 gross tonnage, covering energy usage in EU ports and on voyages between EU ports. On the other hand, the EU ETS, already established in other sectors, was extended to the maritime industry in 2024. The phased rollout of EU ETS places a cap on CO2 emissions, requiring shipping companies to purchase allowances for each ton emitted.

The white paper highlights the economic advantages of bio- and e-methanol in helping ship operators avoid rising non-compliance penalties under FuelEU and EU ETS. The Methanol Institute predicts that by 2050, the combined non-compliance costs of these frameworks could make methanol a more cost-effective option compared to traditional fuels like very low sulfur fuel oil (VLSFO). The flexibility of methanol, particularly in dual-fuel engines, could play a crucial role in the shipping industry’s transition to sustainable practices.

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