EU Proposed SMAP subsidy favors e-fuels and bioLNG

Europe’s carbon market could soon start paying shipowners to switch fuels, but the support on offer is far from equal. In July, the European Commission proposed a revision of the European Union’s Emissions Trading System (EU ETS) that would reserve up to 110 million allowances between 2028 and 2040 for a new Sustainable Maritime Alternative Propulsion (SMAP) mechanism, which is meant to cover part of the price gap between fossil marine fuels and sustainable alternatives. Rystad Energy’s analysis shows that, combined with the EU ETS itself and the FuelEU Maritime regulation, the proposal would reshape the cost ranking of marine fuels in Europe. BioLNG and renewable e-fuels stand to gain the most, while biodiesel made from used cooking oil (UCO) and animal fats – one of today’s most widely used marine biofuels – is left out.

The timing matters. From 2026, shipping companies surrender ETS allowances for 100% of their verified emissions in scope, now including methane and nitrous oxide, while FuelEU Maritime requires a steadily tightening cut in the greenhouse-gas intensity of energy used on board. Both regimes rest on the sustainability rules of the EU’s revised Renewable Energy Directive (RED III). For shipowners, charterers and fuel suppliers, the question is which fuel pathway the combined rules reward.

This story was originally published by Hellenic Shipping News. Read the full story at Hellenic Shipping News →