Renewable hydrogen and ammonia, advanced sustainable biofuels and bio-LNG could benefit from a 10-year tax break under a European Commission proposal, but traditional marine fuels and LNG as marine fuel could lose an exemption from EU energy taxation.
The commission will next week propose a radical revision of the EU's 2003 energy taxation directive aimed at aligning the law with the bloc's climate and energy goals. Member states will be asked to lift an exemption from energy taxation for intra-EU maritime, fishing and freight transport.
A draft now circulating indicates that the commission still wants minimum rates of energy taxation for fossil fuels used in the intra-EU maritime sector to be lower than those applied for general motor-fuel use. And the commission wants a minimum rate of zero to apply for renewable hydrogen, advanced sustainable biofuels and biogas, e-fuels, e-gases and electricity over a transitional period of 10 years. Shore-side electricity provided to vessels while at berth in port should also be exempt.
The commission sees mandatory tax exemption for international aviation and maritime transport as particularly "problematic" given climate challenges and policies. And the energy taxation directive covers a shrinking share of the EU's energy mix and ignores new technologies and products such as power-to-gas, and fuels of non-biological origin. There is no preferential treatment of sustainable new technologies and products, including renewable fuels, the commission notes.
The inclusion of the maritime sector mirrors that of aviation, although the commission is proposing wider exemptions for private jets, cargo carriers and pleasure flights from a planned general EU jet fuel tax.
The commission's draft does not confirm final taxation rates, which it will present in an annex. The legal proposal will need approval by all EU member states, who failed in 2014 to agree on the commission's April 2011 plan to update the energy taxation directive. But a significant tax advantage, if approved by all EU member states, would help shift the balance towards liquefied biomethane, or bio-LNG, green ammonia and waste-based biofuels, especially given forthcoming legislation obliging ships to reduce the average greenhouse gas (GHG) intensity of the energy used on board.
Environmental campaign group Transport & Environment (T&E) has calculated that bio-LNG could be a drop-in fuel for LNG-powered vessels. T&E estimates that waste-based biodiesel would be the second most cost-competitive option, with a forecast 2030 price of between €1.48-€3.20/GJ for used cooking oil (UCO) compared with €2.69-€6.72/GJ for green ammonia.
