Key facts
- EU proposed a new subsidy mechanism for sustainable maritime fuels.
- BioLNG could become cheaper than fuel oil on intra-EU routes.
- Liquid biofuels from waste oils and fats are excluded from support.
- The SMAP mechanism would reserve up to 110 million allowances between 2028 and 2040.
- RFNBOs like e-ammonia could see their entire remaining premium covered.
The European Commission has proposed a revision to the EU Emissions Trading System (ETS) that would introduce a new mechanism called the Sustainable Maritime Alternative Propulsion (SMAP). This mechanism aims to reserve up to 110 million ETS allowances between 2028 and 2040 to subsidize the price difference between fossil marine fuels and sustainable alternatives. The proposal, combined with the existing EU ETS and the FuelEU Maritime regulation, is expected to significantly alter the cost competitiveness of various marine fuels within Europe. BioLNG and renewable e-fuels are projected to benefit the most, potentially becoming cheaper than very low sulfur fuel oil (VLSFO) on intra-EU voyages. In contrast, liquid biofuels derived from waste oils and fats, such as used cooking oil (UCO), are largely excluded from the proposed support. From 2026, shipping companies will be required to surrender ETS allowances for 100% of their verified emissions, including methane and nitrous oxide, while FuelEU Maritime will mandate a progressive reduction in the greenhouse-gas intensity of fuels used on board.