Image Credit: Chad Montgomery, Unsplash
The EU has been urged by the European shipping and aviation sector to prioritise scalable renewable fuel in its upcoming Clean Industrial Deal.
Set to be unveiled on 26 February, the EU’s Clean Industrial Deal is Europe’s industrial decarbonisation strategy which aims to boost the industrial sector and emerging clean technologies.
An open letter signed by the European Community Shipowners’ Associations, Airlines for Europe, and Transport & Environment states that Europe has the potential to be a leader in green fuel technologies, but is currently being hindered by the sector’s financial realities.
“To date Europe has faced a chicken and egg problem. Hydrogen is expensive and without guaranteed demand, producers have been afraid to invest,” Transport & Environment Executive Director William Todts told Zag Daily.
“Fuel mandates would help to guarantee demand, however it isn’t only that. Current ship and airline bunkering practices are based on short-term or spot contracts. They don’t buy fuel for the next ten years. Smart instruments at the EU level that help to bridge the cost gap between fossil and renewable hydrogen for consumers can take the risk out of hydrogen investments.”
The open letter states that large investments are required to keep the aviation and shipping industries competitive, and this investment must be channelled into clean fuels.
It states that these renewable fuels must be produced on a large scale as part of a “robust European industrial base” if the EU is to meet its climate targets for aviation and shipping.
These climate-related benefits are in turn expected to build a supply chain that enhances energy security and increases the workforce.
According to the Draghi report which assesses European competitiveness, European shipping and aviation requires around €100 billion annually for the energy transition.
However, a series of financial obstacles are highlighted in the open letter for large-scale green fuel projects such as high upfront capital requirements, high production costs, and technological risk.
The letter urges the European Commission to act on five areas. These include scalable renewable fuels needed by shipping and aviation in the Clean Industrial Deal; harnessing the Sustainable Transport Investment Plan to de-risk investments; and establishing a European industrial base for scalable renewable shipping and aviation fuels.
It also calls for an integrated matchmaking platform that facilitates aggregated access to European and Member State financing schemes, and to facilitate the role of airports and ports as energy hubs.
