EU maritime law to encourage LNG over UCO: NGO

The forthcoming EU regulation to reduce maritime CO2 emissions provides scope for shipping's continued use of LNG as is a blow to the market for used cooking oil (UCO), said environmental campaign group Transport & Environment (T&E).

The European Commission will next month put forward legislation to force ships to reduce average greenhouse gas (GHG) intensity of energy used by 6pc by 2030, by 49pc by 2050 and by 75pc by 2050, all from 2020 levels. It estimates the cost of achieving this at €90bn by 2050.

T&E says that this simple carbon intensity target would allow for LNG to be compliant for up to two decades even if the low-pressure four-stroke Otto LNG engine ceases to be compliant from 2025. T&E argues that the draft targets would enable the low-pressure two-stroke Otto engine, with medium methane slippage, to be compliant to at least until 2030. A two-stroke high pressure dual-fuel engine, with a diesel cycle, would be compliant until 2040.

T&E calculates that LNG in dual-fuel high-pressure, diesel-cycle engines would be the cheapest compliance option, at €0.85-€0.93/GJ in 2030. It sees waste-based biofuels as the second most cost-competitive option, with a forecast 2030 price of between €1.48-€3.20/GJ, and sees green ammonia's 2030 price at €2.69-€6.72/GJ.

Similarly, a shipping agent calculates that the GHG-intensity threshold is set for LNG-fuelled engines and will incentivise switching fuel oil to LNG. The agent is not sure how much additional carbon-intensity reductions the measure will achieve on top of those pursued by the International Maritime Organization (IMO). And there are questions about how the maritime GHG-intensity reductions will work when the shipping sector is included in the EU emissions trading system (ETS).

The commission's 193-page impact assessment counters that there is a 9.5 factor difference between worst- and best-case scenarios for LNG GHG intensity. It estimates that fossil LNG, in a four-stroke engine, has a GHG performance of 709.49g-CO2 e/kWh, waste-based organic biogas of 248.39g-CO2 e/kWh, and renewable synthetic gas of 75.19g-CO2 e/kWh, all following well-to-wake calculations.

T&E wants the EU to include a sub-target, or ideally a high multiplier of five for 'green' e-fuels. It said that there should be limits on pooling or exchange of credits to e-fuels only, and a clear ban on crop-based biofuels and natural gas as compliance options.

The European Parliament and EU member states will have to agree on a final legal text. If approved as proposed, T&E projects that fossil LNG could reach 18.8pc of total energy used in EU-related shipping in 2030 and 35.3pc by 2035, or 7mn t/yr by 2030 and 11.2mn t/yr by 2035.

T&E sees additional EU shipping demand taking 5.1mn t/yr of UCO feedstock in 2030, on top of demand forecast for road transport and aviation of 6.3mn t/yr in 2030. This means that up to 9.7mn t/yr of UCO imports would be needed, more than six times higher than current levels. T&E noted recent research indicating higher EU demand creating incentives for UCO adulteration.

The commission said that there will be sufficient supply of non-agricultural oils, like UCO, by 2030. It projects the maritime sector to consume only 20pc of feedstock available in the bloc by that date, and between 27-34pc by 2050.

"The remaining feedstock is consumed in other transport sectors such as road transport and aviation," officials note.

The European Waste-to-Advanced Biofuels Association (Ewaba) is less concerned by increased maritime demand, but said the commission's proposals for aviation could "completely" distort the sector and "divert more than half of feedstocks" towards that sector. This would undermine climate mitigation efforts in road and maritime sectors. Ewaba was waste lipids like UCO to be reserved for the road and maritime sectors.

By Dafydd ab Iago