eFuels in maritime transport

Every year, around 300 million tonnes of marine fuels are combusted to propel the vessels operating on Earth's seas. Carrying out 90% of global trade, maritime transport is instrumental to the global economy and exposed to international competition like no other sector. As part of the European Green Deal, the EU has taken first steps toward the decarbonisation of the maritime sector with the FuelEU Maritime Regulation and the extension of the EU Emissions Trading System to shipping. At the global level, the International Maritime Organization (IMO) is developing a Net Zero Framework to align international rules with the sector's climate ambitions.

The progress that has been made is substantial. 50% of all tonnage ordered in 2024 features alternative fuel-enabled propulsion, and 79% of the existing orderbook by deadweight tonnage is already capable of running on alternative fuels. Yet alternative-fuel capability alone does not guarantee that vessels will operate on renewable fuels. For that to happen, the fuel must be available at a competitive price. Of the more than 300 eFuel projects identified globally, only 4% of announced renewable hydrogen production capacity has reached a Final Investment Decision (FID). Current eFuel commitments can supply roughly 1.07 million tonnes to market by 2030, against the 13.7 million tonnes needed to achieve even the IMO's 5% GHG reduction target. Bridging this gap requires €34.7 to 46.7 billion in investment by 2035. The regulatory framework in its current form is not fit to mobilise this scale of investment.

Breaking the eFuel Bottleneck

The central challenge for maritime decarbonisation is no longer technology, but bankability. The inherent economics of eFuel projects remain too uncertain to attract private capital at scale. The Total Cost of Ownership for newbuild eFuel-powered vessels is currently 45% to 85% higher than for conventional ships. Without credible long-term demand signals and targeted financial instruments to bridge the cost gap, Final Investment Decisions will continue to stall, and the EU's climate ambitions for shipping will remain unattainable.

The eFuel Alliance is fuel-pathway agnostic in its approach to promoting sustainable shipping, recognising that different energy carriers are suited to varying use cases. While direct electrification represents a promising solution for short-range operations, eMethanol and eLNG are well-suited for medium and long-haul routes due to their high energy density and compatibility with existing engines. eAmmonia is rapidly emerging for larger vessels given its zero carbon emissions and competitive volumetric energy density. eDiesel offers a transitional solution for long-range operations with minimal changes to existing technology. What all these pathways share is a common dependency on stable policy and sufficient investment.

A Holistic Policy Response

To mobilise investment across the full maritime eFuel value chain, policymakers must act simultaneously on demand signals, production rules, cost parity mechanisms, and targeted funding. Addressing any single element in isolation is insufficient. The eFuel Alliance calls for concrete amendments to four interlocking regulatory instruments.

Our recommendations

1. Renewable Energy Directive — Long-Term Demand Certainty

The RED forms the regulatory backbone for eFuel markets, but in its current form it falls critically short. The existing RFNBO minimum volume of approximately 36 TWh stands against the 125 TWh required to meet a 29% renewable energy share in transport. Closing this gap requires four targeted interventions. Legally binding, long‑term RFNBO mandates that give investors visibility beyond the current horizon are needed, alongside three complementary reforms: a simplification of the Delegated Acts’ production criteria, since the current strict temporal and geographic correlation requirements increase the levelised cost of hydrogen by 20 to 40 percent without global precedent; a revision of certification rules to enable eFuel imports from third countries, which could reduce levelised costs by up to 30 percent; and a cross‑sectoral offtake mandate for Fischer‑Tropsch co‑products across road and aviation, without which the price‑sensitive shipping sector is left to shoulder the full cost burden of production.

2. FuelEU Maritime — Investment Signals with Binding Force

FuelEU Maritime is the central instrument for integrating eFuels into shipping, but fails to generate market momentum. Its RFNBO sub-target is effectively optional, riddled with exemptions, and offers no trajectory beyond 2034, leaving a majority of reported eFuel projects stuck in the pre-FID phase. The eFuel Alliance calls for a binding RFNBO sub-quota with a clear trajectory: 6% by 2030, rising to 48% by 2050. Alongside this, the EU must actively align FuelEU's methodological strengths with the emerging IMO Net Zero Framework, and introduce a Book and Claim mechanism to address the uneven regional distribution of eFuel availability.

3. EU Emissions Trading System — Closing the Cost Gap

The ETS extension to shipping prices carbon but does not sufficiently reward early adoption of renewable fuels to overcome a Total Cost of Ownership gap of 45% to 85% for eFuel-capable newbuilds. The EU should model a dedicated maritime allowance mechanism on the aviation ETS, which covers 95% of the eSAF price differential through ring-fenced allowances. With maritime ETS revenues forecast at €5.4 billion, recycling these directly into RFNBO offtake is both fiscally consistent and politically coherent. Critically, unlike the aviation model, the maritime mechanism must provide visibility well beyond 2040 to match the 10- to 15-year offtake agreements that fuel producers require to reach FID.

4. Targeted Funding — De-Risking Early Movers

Regulation alone does not mobilise capital where project-level bankability is not secured. Capital costs for first-of-a-kind RFNBO production in Europe run 70% to 130% higher than in competing regions, and the absence of long-term offtake guarantees remains the primary barrier to financial close. Existing EU instruments like the Innovation Fund, CEF, the European Hydrogen Bank, Horizon Europe, and InvestEU must be adapted to bridge this gap through capital grants, loan guarantees, and a double-sided auction mechanism modelled on H2Global. A fully ring-fenced maritime window under the European Hydrogen Bank is essential to prevent maritime projects from being systematically outbid by heavy industry. Green Corridors between major ports provide a complementary instrument, concentrating demand geographically to de-risk first-of-a-kind facilities and facilitate competitive RFNBO imports from regions such as North Africa.