Meeting with
Rolls-Royce Power Systems (RRPS), Brussels,
Ref. Ares(2022)1757773 - 09/03/2022
23/11/2021, (10:15 – 11:15)
Scene setter
• You wil meet
Rolls-Royce, to discuss the current
challenges in the Marine Industry and inform him about FuelEU Maritime, which is
relevant for Rolls-Royce maritime business.
• The proposal of the European Commission for a Regulation (FuelEU Maritime) on
the use of renewable and low-carbon fuels in maritime transport was published on
14/07/2021 as part of the Fit for 55 package.
• The initiative complements existing rules on renewable energy supply and
alternative fuels infrastructure. The aim is to build a common EU regulatory
framework that addresses all relevant aspects of fuel demand, production and
distribution, to increase the use of cleaner energy and at the same time maintain
the competitiveness of the maritime sector.
Objective(s)
• Ask Rolls Royce’s views on the most promising technologies for low emission
maritime transport and on current trends in the marine equipment industry.
• Obtain Rolls Royce support to COM initiative on FuelEU maritime.
• Call for engagement in the technical discussions that wil be needed to draw up
the delegated acts of FuelEU, once approved.
Key Messages
• The European Commission proposes the FuelEU Maritime Regulation
to create a minimum (but increasing) level of demand for renewable
and low-carbon fuels (RLF) in the maritime transport sector.
• The FuelEU Maritime proposal introduces requirements on ship
operators to reduce gradual y the yearly average greenhouse-gas
intensity of the energy used on board ships. It also requires container
and passenger ships, to use onshore power supply (OPS) or, in
alternative, zero-emission technologies, when they are in ports.
• The initiative respects the principle of technological neutrality and
does not promote any specific fuel/solution. Comparison between
fuels are made taking into account al the main greenhouse gases
(CO2, methane and nitrous oxide) emitted well-to-wake.
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Meeting with
Rolls-Royce Power Systems (RRPS), Brussels,
23/11/2021, (10:15 – 11:15)
• Operators wil be free to decide which is the best combination of fuels
and energy converters (being these engines, fuel cel s, batteries, etc.)
that works best for them.
• We expect engine manufacturers to also engage in this chal enge for
technological solutions that are best suited to the different needs of
the various maritime transport activities (ferries, cruises, deep see
vessels, ets). We hope to see EU manufacturers at the forefront of
these developments.
• FuelEU Maritime would set stable and long-term objectives (2025-
2050) in terms of GHG targets, providing a frame for the industry to
work and adapt.
• Safety remains at the core. The phase-in of new energy sources
should be safety assessed. The role of the industry is key in that
respect, both at European and international (IMO) level.
• Final y, we hope to be able to rely on Rol s Royce’s expertise and
contributions in the forthcoming implementation work of the FuelEU
initiative, also with particular regard to assessing engine’s
performance with respect to fuel slip emissions (methane and
nitrogenous oxide).
Defensive Points
Why is a proposal like FuelEU Maritime necessary? Why not relying on the ETS
to provide the single framework for emission reductions in Europe?
• The current carbon price in ETS, and its expected evolution, wil encourage further
effort on energy efficiency, but wil not be suf icient to provoke a switch from fossil
to renewable and low-carbon fuels and the roll-out of related investment, at least
for another decade.
• The transition to cleaner fuels requires long lead times and cannot be delayed.
The FuelEU Maritime Regulation wil initiate this transition by requiring specifically
the use of renewable low-carbon fuels in the maritime sector, in an initially small,
but gradually increasing proportion.
Why does FuelEU Maritime focus on demand rather than fuel supply?
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Meeting with
Rolls-Royce Power Systems (RRPS), Brussels,
23/11/2021, (10:15 – 11:15)
• Ships can bunker where they want and travel long distances on a single tank. For
this reason, ships bunkering in third countries are likely to circumvent any measure
focusing solely on fuel supply in the EU. This would translate in massive carbon
leakage.
• To guarantee avoid carbon leakage, we must therefore put requirements on fuel
demand. Nevertheless, the aspects or fuel supply and fuel distribution are also
addressed in the Fit for 55 package through proposal for revision of the
Renewable Energy Directive (fuel supply) and the Alternative Fuel Infrastructure
Directive (fuel distribution).
What types of fuel wil FuelEU Maritime incentivise?
• The proposal requires the reduction of the greenhouse gas intensity of the energy
used by ships and is therefore technology neutral. It accommodates all sustainable
alternative fuels in maritime transport. These include: liquid biofuels, e-liquids,
decarbonised gas (including bio-LNG and e-gas), decarbonised hydrogen and
decarbonised hydrogen-derived fuels (including methanol and ammonia) and
electricity. On the other hand, biofuels of first generation are not considered
sustainable and are treated like fossil fuels.
• By leaving the choice of fuel to market actors, we expect some variety in the
technology mix, to accommodate for different types of businesses and operating
conditions. This would have the advantage of not creating dependence on a single
feedstock and of stimulating further research in multiple fuels and technologies.
• The proposal includes the possibility to pool results of different ships and reward
those that have gone beyond the target through use of advanced technologies,
such as those based on renewable hydrogen. The proposal also requires big
emitters to use on-shore power supply in ports or alternative zero-emission
technologies, which could also encourage fuel cells and hydrogen-based fuels.
Why does the FuelEU maritime initiative promote existing technologies such as
LNG which are not a long-term solution to decarbonisation?
• We do not foresee the entire maritime sector using only one technology - at least
for another couple of decades. This is not necessarily bad, since what matters is
the origin of the fuel rather than the technology that uses it. Fuel oil, LNG and even
hydrogen can be bad for climate if they come from a fossil path, but the same
technologies, used with sustainable biofuel and biogas, synthetic fuels or
renewable Hydrogen and Ammonia, have a much more favourable impact.
• Fossil LNG is a transitional fuel with very modest GHG gains, but it has the great
advantage of dramatically abating air pollution and being immediately available for
both coastal and ocean travel.
• Looking ahead, LNG-fuelled ships could gradually decarbonise by using
increasing amounts of bio-methane produced from waste, some share of
hydrogen, and, later, synthetic gas. They can also be retrofitted to use ammonia.
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Meeting with
Rolls-Royce Power Systems (RRPS), Brussels,
23/11/2021, (10:15 – 11:15)
• We must also recognise that zero-emission fuel options, like hydrogen or
ammonia, have not yet been fully tested for maritime transport. We should not wait
another decade before introducing cleaner technologies. A transition fuel like
conventional LNG can help bridge the gap.
What role do you see for hydrogen in reducing shipping emissions?
• On shorter distances and in ports, lower energy density is sufficient, already
opening additional decarbonisation and zero-pollution pathways (e.g. hydrogen
and electrification). However, currently, these solutions remain limited to very
specific market segments (such as short-distance ferries) with relatively low
power requirements and the ability to bunker frequently. For other types of
operations, a higher energy density is required – but neither electricity nor
hydrogen yet offer this.
• Hydrogen and hydrogen-based fuels (synthetic liquid or gaseous fuels, such as
synthetic LNG, or ammonia) wil however certainly play a role in the longer terms
as primary sources of energy or as blends. Hydrogen is seen as a stepping stone
to the production of synthetic “drop-in” fuels, which can be used with existing
technology and infrastructure.
• Changes to infrastructure and energy conversion equipment (engines / machinery
on board) are also important to consider. Technologies such as hydrogen or
ammonia would require a dedicated infrastructure for distribution.
Is FuelEU maritime favouring specific technologies?
• FuelEU maritime is technology neutral. Sets GHG reduction targets, which can be
met by using the available technologies without favouring one on another.
Why do the maritime and aviation proposals have different approaches?
Maritime and aviation differ substantially in two important aspects:
• There is a much greater variety of clean fuels and technology in maritime than
there is in aviation. Different technologies in maritime are suited to different types
of ships and businesses. It would be impossible to adopt in maritime a
prescriptive approach identifying only two or three fuels to be used. A goal-based
approach that leaves the choice of technologies to operators is necessary in
maritime.
• Contrary to airplanes, ships can cover very large distances on a single tank. This
means that obligations to supply only clean fuel in EU ports would not guarantee
actual use of those fuels. Ships would bunker cheaper fuel outside the EU,
generating carbon leakage.
Why are crop-based biofuels (i.e. food and feed based biofuels) excluded?
4/7
Meeting with
Rolls-Royce Power Systems (RRPS), Brussels,
23/11/2021, (10:15 – 11:15)
• We do not wish to open two entirely new and large markets like maritime transport
and aviation to crop-based biofuels. If crop-based biofuels were promoted in the
maritime sector, there would be a significant increase in their demand, which
would increase the pressure on land and could lead to the extension of
agricultural land into high-carbon stock areas (forests, wetlands and peatland).
This extension would accordingly result to additional greenhouse gas emissions
and risks to the biodiversity.
Is there an overarching Impact Assessment for the whole Fit for 55 Package?
(Cumulative impact)
• I need to push back on this recurrent argument that the Commission did not
properly assess the combined or cumulative impacts of this package.
• In fact, the impact assessment accompanying the 2030 Climate Target Plan
provides the costs and benefits of the revised climate ambition, i.e. of achieving
55% greenhouse gas emissions reductions by 2030. It defines cost-effective
pathways to deliver the targets, assessing the best mix of instruments and
sectoral contributions. It shows that all sectors need to contribute; otherwise,
some sectors wil have to do more, in a less cost-effective way. It also shows
benefits in deploying a broad mix of policy instruments, including extending
carbon pricing and increased energy and transport regulatory policy ambition.
• Al Fit for 55 impact assessments start from the Climate Target Plan, ensuring that
the proposals “add up” to the 55% greenhouse gas emissions reductions target
and that all sectors contribute to the effort cost-effectively. In other words, we
followed a two-step approach: the Climate Target Plan provided the key elements
of the policy architecture (e.g. standards, targets, sectors targeted) that are
spelled out now in the Fit for 55 proposals.
How will FuelEU affect the freight rates and the consumer prices?
• It is difficult to directly relate freight rates to the cost of fuel, since other factors
have often more weight in freight rates determination such as the demand and
supply of raw materials, fleet composition and demand and supply of ships.
• Nevertheless, based on the existing literature on the relation between fuel prices
and freight rates, we have estimated the impacts on the freight rates and found
these to be in a range of 0.1% to 2.5% for 2030 and 0.8% to 15.1% in 2050.
• Given the low share of transport costs on final consumer prices, the intervention is
not expected to lead to significant impacts on the prices of commodities and final
goods.
Why EU Taxonomy for maritime considers only direct emissions (tank to
funnel) and therefore does not recognise the use of low carbon renewable
fuels?
5/7
Meeting with
Rolls-Royce Power Systems (RRPS), Brussels,
23/11/2021, (10:15 – 11:15)
• The use of a tank-to-wake approach (or funnel emissions) in the Taxonomy
Climate Delegated Act criteria for shipping reflects current maritime legislation on
GHG emissions, both at global and EU level, as well as current metrics and
indicators, focussing on energy efficiency of vessels. However, we acknowledge
in order to contribute significantly to the EU climate objectives, shipping needs
both to use less energy and use cleaner energy in a life cycle perspective, as has
been proposed in the Fuel EU maritime initiative and is currently work-in progress
at IMO. We wil update the Taxonomy criteria accordingly, as soon as respective
metrics and benchmarks have been agreed.
How RR could prepare for FuelEU?
• Rolls Royce is providing power systems that wil have to cope in the future with
several type of new fuels (methanol, bio-fuels, ammonia, hydrogen) and fuels-
blends. For long-term objectives, use of zero emissions technologies such as fuel
cells and internal combustion engines running on hydrogen wil be needed.
How RR could help with FuelEU and other GHG targets?
• Rolls Royce is invited to contribute with its technical and scientific knowledge in
developing the future FuelEU implementing acts that wil look into further
developing the science and technological base of emissions factors for fuels and
engines.
Background
About FuelEU:
• The FuelEU Maritime initiative was first presented to the Council Shipping
Working Party on 01/09/2021 and is currently being examined by the Member
States’ experts. Overall, the delegations have welcomed the initiative and
agreed with its aim and importance in order to meet the EU climate ambitions.
• The next step is a policy debate in the context of the Transport,
Telecommunications and Energy Council (TTE) that wil take place on
09/12/2021, where the Slovenian Presidency expects delegations to express
their expectations on the FuelEU Maritime proposal.
• The FuelEU Maritime proposal was presented to the European Parliament’s
Committee on Transport and Tourism (TRAN) on 27/09/2021 in the context of
the Fit for 55 package. Additionally, DG MOVE gave a technical presentation for
MEP assistants and political advisors in TRAN, on 30/09/2021.
About Rolls Royce:
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