EU reports on the competitiveness of alternative fuels

On 25th October the European Parliament adopted its report on The deployment of infrastructure for alternative fuels in the EU which pointed out that taxation has a major impact on the price competitiveness of alternative fuels and underlined that a technology-neutral approach should be adopted to create a level playing field.

It also noted that disparities in energy taxation for shore-side supply for ships and energy used to generate alternative fuels should be addressed. It also calls on the Commission to support the decarbonisation of the maritime and shipping sector with a clear focus on innovation, digitisation and adaptation of ports and ships.

The shipping sector and the European independent fuel suppliers welcome the European Parliament’s report which broadly reflects the positions they have taken in its response to the consultations held earlier this year in view of the Evaluation and Fitness Check of the Energy Taxation Directive. The respective positions can be accessed using the following links: for the shipping industry (represented by ECSA, CLIA Europe, Interferry and EUDA) here and for Europe’s Independent fuel suppliers (UPEI) here.

These stakeholders jointly call for the retention of the tax-free bunkers and luboils provided for in the Energy Taxation Directive which is a reflection of the international norm and is essential for EU companies to compete on the same footing as shipowners and suppliers from outside the EU and thus must be retained. Moreover, they call for the exemption for fuels to dredgers to become mandatory in order to avoid market distortions and loss of competitiveness.

However, they recognise that the current Directive is not providing equal treatment of energy supplies to the shipping industry thus hampering investments in and the uptake of cleaner technologies, such as shore-side electricity, fuel cells, methanol, etc. They, therefore, advocate a technology neutral approach. In view of the global nature of the industry and the importance of moving to greener shipping through the use of cleaner technologies in order to ensure that environmental objectives are met, a revised EU Energy Taxation Directive should provide for a mandatory EU wide taxation exemption for all energy carriers (i.e. fuels and electricity, including shore-side). Such level playing field would help close the cost gap between Heavy Fuel Oil and alternative fuels and electricity.

Theo, therefore, welcomes the initiative taken by the European Parliament calling the EU Member States to incentivise the uptake of low-carbon and carbon-free alternative fuels and to remove disparities in energy taxation. They also support the call to the EU to increase and facilitate the use of Liquefied Natural Gas and shore-power electricity by further investment in port infrastructure.