The European Parliament adopted its position on 

 in late October with 70% of the parliament representatives voting in favour. A trialogue is currently in progress with a conclusion expected by the end of Q1 2023. The endorsed Report serves as a fundamental EU legislative instrument aiming to decarbonise the transport sector. As such, it will be used as a mandate for an ongoing trialogue. In this article, we present the following updates from the FuelEU Maritime proposal:

The potential impacts of the proposal towards biomethane and its certificate/GO market

The FuelEU Maritime Report was adopted by the European Parliament on 19 October 2022. Two weeks following the adoption, the interinstitutional negotiation (trialogue) has begun, and the discussion will continue until the end of Q1 2023.

FuelEU Maritime - Nov update (2nd)

The Report proposes targets for emissions reduction, which will apply to ships above a gross tonnage of five thousand. The new rules will include all energy usage on board in or between EU ports, and 50% of the energy usage on voyages where the departure or arrival port is outside of the EU or in its outermost regions. The European Parliament also agreed on the proposal to further cut GHG emissions in the maritime sector until 2050, compared to the 2020 level.

FuelEU Maritime: GHG reduction target

In addition, the Report calls for the following key implementations:

The recognition of LNG as a transitional fuel and the blending potential with bio-LNG.

The promotion of renewable and low-carbon fuels and propulsion technologies with a high potential for sustainability, commercial maturity and a high potential for innovation and growth to meet future needs.

The eligibility of sustainable maritime fuels produced from various feedstocks is listed in Parts A and B of Annex IX of Directive (EU) 2018/2001.

The introduction of a new article on the usage of RFNBOs (Renewable Fuels of Non- Biological Origins) with a target of at least 2% by 2030, and the creation of a dedicated incentive for RFNBOs

The non-eligibility of food and feed crop-based fuels under this Regulation

The application of an LCA (Life Cycle Assessment) and WtW (Well-to-Wheel) approach.

The certification of biofuels, biogas, renewable fuels of non-biological origin, and recycled carbon fuels to rely on RED.

How FuelEU Maritime could impact biomethane and its certificate market?

The adoption of the Report by the European Parliament results in biomethane being recognised as a renewable fuel with the potential to blend with and replace fossil transport fuels like LNG. Following this recognition, the FuelEU Maritime, once enacted, would likely create a significant, positive impact on the biomethane market, particularly when it comes to the bio-LNG sub-market. It could potentially affect both the demand and prices of biomethane and its associated certificates.

The call for an increase in emissions reduction targets for the maritime sector and the call for the promotion of renewable and low-carbon fuels will highly send a bullish signal to the demand for biomethane/bio-LNG markets. The possible increase in demand for this green gas would result in a rise in demand for biomethane certificates/GOs.

The proposal to recognise the blending potential of LNG with bio-LNG would likely lead to bullish sentiment for the biomethane certificate/GO market, as the green credentials of gas acquired by fuel suppliers and/or commercial consumers will need proof of origins through energy attribute certificates such as GOs. Consequently, we could anticipate that the FuelEU Maritime proposal will increase demand for biomethane certificates/GOs.

Considering the demand for biomethane certificates with specific attributes, biomethane from the waste feedstock or feedstock listed in Parts A and B of Annex IX of Directive (EU) 2018/2001 could be potentially in high demand, according to restrictions of eligibility of biofuels as well as the requirement of this proposal. Whereas biomethane produced from crops, particularly those from the UK, is unlikely to see demand from this sector.

Additionally, proof of sustainability of feedstocks used to produce biomethane – the regulation covering biofuel eligibility – is another issue pushing demand for (sustainability) certified biomethane certificates/GOs. With the increasing demand for certified biomethane certificates from waste feedstock, in the short term, we could expect the price range of biomethane certificates/GOs at EUR 70 – 100/MWh, similar to certified biomethane certificate/GOs prices (for transport) in some unsubsidised markets such as Germany.

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The FuelEU Maritime Draft Report, introduced in April 2022 and amended on 3 October 2022, has been recently passed and adopted by the European Parliament. In this article, we update the new decision-making process timeline and address key points from the 

, particularly those impacting the biomethane market, that will be used as a legislative foundation for the interinstitutional negotiations which is currently taking place

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