A new White Paper commissioned by the Methanol Institute reveals that upcoming EU regulations will create a level playing field for bio- and e-methanol in the maritime sector, making them economically competitive with fossil fuels.
The study, conducted by energy expert Dr Jeroen Dierickx of iDefossilise, examines the impact of the FuelEU Maritime Regulation and EU Emissions Trading System (ETS) on the marine fuel landscape.
The EU’s Fit for 55 package introduces significant penalties for continued fossil fuel use, incentivising vessel operators to transition to sustainable alternatives.
For fuel producers, these regulations offer a stable, long-term framework from 2024 to 2050, creating secure investment opportunities in the maritime sector.
Gregory Dolan, CEO of the Methanol Institute, commented on the findings: “The study confirms the profound impact of regulations on the demand for methanol as a marine fuel. The emerging EU regulatory framework is robust enough to enhance the business case for low-carbon and renewable methanol fuels and fuel blends, supporting the transition to a sustainable maritime industry.”
Key findings from the study include:
- Escalating penalties: Non-compliance costs for vessel owners using fossil fuels like Very Low Sulphur Fuel Oil (VLSFO) will rise from €39 per tonne in 2025 to €1,997 per tonne by 2050.
- EU ETS implementation: The carbon emission trading scheme will be phased in from 40 per cent in 2024 to 100 per cent in 2026, with projected costs of €321 per tonne of VLSFO at a €100 carbon price.
- Compliance options: Bio- or e-methanol, or blends with fossil methanol, offer viable compliance alternatives.
- Price forecasts: The study estimates average maximum prices for bio-methanol at €1,193 per tonne and e-methanol at €2,238 per tonne (2025-2033), decreasing to €1,325 per tonne (2034-2050).
- Fuel blends: To meet increasing emission reduction targets, blending ratios of bio- and e-methanol with conventional methanol will need to increase over time.
The White Paper concludes that both bio- and e-methanol show significant economic potential under the new regulations.
The FuelEU Maritime Regulation and EU ETS are expected to effectively promote the adoption of these sustainable fuels in maritime shipping, providing a clear pathway for companies to align with regulatory frameworks while transitioning to greener fuel options.
This study marks an important milestone for the maritime sector, offering valuable insights for both vessel operators and fuel producers as they navigate the transition to a more sustainable future in shipping.
