Opinion of the European Economic and Social Committee – Low-carbon and renewable fuels: building the capacity of European industry to decarbonise the aviation and maritime sectors in a spirit of European autonomy (own-initiative opinion)
Date: 2024-07-10
Institutions: European Economic and Social Committee
Subjects: EU production, air transport, aviation fuel, biofuel, competitiveness, hydrogen production, investment, marine fuel, maritime transport, reduction of gas emissions, research and development








C_202406019EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2024/6019


23.10.2024






Opinion of the European Economic and Social Committee

Low-carbon and renewable fuels: building the capacity of European industry to decarbonise the aviation and maritime sectors in a spirit of European autonomy


(own-initiative opinion)

(C/2024/6019)


Rapporteur: 
Anastasis YIAPANIS

Co-rapporteur: 
Franck UHLIG






Advisor


Mihai IVAŞCU (for the rapporteur, Group III)
Elspeth HATHAWAY (for the co-rapporteur, Group II)




 


 




Plenary Assembly decision


18.1.2024




Legal basis


Rule 52(2) of the Rules of Procedure




Section responsible


Consultative Commission on Industrial Change (CCMI)




Adopted in section


6.6.2024




Adopted at plenary session


10.7.2024




Plenary session No


589




Outcome of vote (for/against/abstentions)


198/0/4




1.   Conclusions and recommendations









1.1.


Several sustainable and low-carbon fuel production projects have been launched across the EU. However, they are at various early stages of development, and there is a notable absence of incentives for their adoption. High production costs and uncertainty regarding the availability of sustainable fuels remain significant barriers to securing agreements for their widespread uptake. A lack of sustainable fuel production in the EU would negatively impact the EU’s strategic autonomy.












1.2.


The EESC advocates for a comprehensive roadmap to gradually increase the use of sustainable aviation fuels (SAF) to ensure stability in planning for all stakeholders. Achieving true decarbonisation in aviation necessitates international cooperation and binding ambitious commitments from all global stakeholders and countries.












1.3.


The maritime industry will focus by 2030 on the development and implementation of reliable propulsion systems, fuel supply infrastructure, and logistics technologies on a large scale. A significant challenge remains in establishing the necessary bunkering infrastructure in ports worldwide to safely supply ships with alternative fuels.












1.4.


The EESC highlights the risk of a possible shortage of available feedstock resources and the required volumes of decarbonised energy required for ensuring transition to sustainable fuel manufacturing. A holistic approach and structured dialogue with various industries (agriculture, chemicals, waste management and recycling) are necessary to establish essential value chains.












1.5.


The Committee acknowledges the need for concrete public support and a stable regulatory framework to boost the competitiveness of the hydrogen sector globally. Uncertainties remain regarding the feasibility, time frames and costs of scaling up direct air capture facilities, as well as the availability, safety and infrastructure requirements associated with hydrogen production.












1.6.


The EESC urges EU policymakers to establish regulatory conditions conducive to unlocking investments, including providing enhanced incentives to stimulate immediate production and cultivate a concrete market for fuels with reduced carbon footprints. It proposes aligning taxation with the climate impact of each fuel and supports a Europe-wide proposal for robust incentive mechanisms, including very low or zero taxation on low-carbon fuels.












1.7.


Substantial investments in low-carbon and renewable fuels and infrastructure are necessary, including funding for various fuel production components, fast permitting processes and employee training. EU grants and subsidies do not sufficiently prioritise the development of low-carbon and renewable fuels production infrastructure for the aviation and maritime sectors.












1.8.


The EESC considers that contracts for differences are an effective mechanism for incentivising investments in technologies with non-competitive production cost, helping stabilise prices and provide certainty for investors.












1.9.


Various forms of public financial assistance exist but are not customised to the specific needs of the aviation and maritime sectors. Where necessary, new forms should be implemented, including European public investment funds and government resources, to mitigate the risks associated with investing in pioneering production facilities.












1.10.


Enhanced R&D efforts are essential to reduce the costs of advanced, low-carbon technologies and facilitate their commercialisation. In the short term, the EESC calls for a holistic strategy for a clean transition of entire industrial value chains, incorporating the integration of hydrogen, scaling up biofuel production, expanding synthetic fuel production, and continuing existing sectoral partnerships under the successor of Horizon Europe.












1.11.


The aviation and maritime industries must promptly take initiatives to ensure access to low-carbon energy resources and the availability of industrial technologies aligned with these objectives. Their efforts must be supported by incentives and support mechanisms, as well as a coherent regulatory framework at both the European and international levels.












1.12.


The EESC urges the European Commission to commit to providing sufficient long-term funding for R&D for new technologies, including through programmes like Horizon Europe, the Innovation Fund and Invest EU. The Committee insists on social conditionality for all public funding to ensure responsible use of EU taxpayers’ money.












1.13.


The EESC calls for awareness and educational campaigns at regional, national and EU levels to deepen understanding of the importance of renewable and low-carbon fuels. Advanced skills development programmes, including vocational training and support for job transitions across entire value chains, are necessary within the broader framework of facilitating skill development and job transitions, and fostering quality social dialogue. The EESC reiterates the priority of ensuring high health and safety standards for workers throughout the supply chain, particularly during the adoption of new ecological processes and fuels.












1.14.


The EESC highlights the critical need to preserve and enhance the EU industry’s competitiveness in the face of intense global competition, advocating for monitoring mechanisms and binding international commitments. This necessitates the implementation of policies, funding and tax incentives to uphold the international standing of EU industrial players, particularly given the limited similar climate measures in many non-EU economies.




2.   General comments









2.1.


The European Union aims to achieve climate neutrality by 2050 and is clearly committed to green maritime and air transport through major European initiatives such as the European Green Deal, the ‘Fit for 55’ package and the Net Zero Industry Act, which aim to further reduce greenhouse gas emissions and use more sustainable fuels for maritime and air transport. To contribute to the 2050 targets, the EU refining industry estimates that an investment ranging from EUR 400 to 650 billion will be required (1).












2.2.


Several projects have been launched across the EU to produce sustainable and low-carbon fuels. They are in different incipient phases and the EESC notes that higher production costs, uncertainty regarding the availability of sustainable alternative fuels and the absence of a reduction in the price gap compared to fossil fuels are major obstacles to their development.












2.3.


The European Commission has launched two European alliances made up of relevant stakeholders to investigate the challenges faced by the aviation and maritime sectors to identify potential solutions: the Alliance for Zero Emission Aviation (AZEA) covering the aviation sector and the Industrial Alliance for the Renewable and Low-Carbon Fuels Value Chain (RLCF) covering both the marine and aviation sectors.




3.   The aviation sector









3.1.


The International Air Transport Association (IATA) estimates that 450 billion litres of sustainable aviation fuels (SAF) will be needed by 2050 to achieve ‘net zero transition’ (2). The ReFuelEU Aviation initiative mandates that SAF must constitute 2 % of the fuel provided at EU airports by 2025, rising to 6 % by 2030, and gradually increasing to 70 % by 2050. In addition, these targets include an average share of 1,2 % for synthetic fuels between 2030 and 2031, which will gradually rise to 35 % by 2050. The EESC has called for a ‘realistic and comprehensive roadmap for the incremental increase of SAF utilisation to provide planning stability for all stakeholders’ (3).












3.2.


With a truly ambitious and global approach needed to decarbonise all aspects of this complex sector (aircraft design, production, airport management, flight paths etc.), the data show that most greenhouse gases are emitted during propulsion (4). So, more efficient engines, powered by sustainable fuels, will be needed in the short term, together with hydrogen and clean electricity in the future.












3.3.


True decarbonisation of the aviation sector is only possible if all international stakeholders come together to agree on ambitious and binding commitments.




4.   The maritime sector









4.1.


FuelEU Maritime applies to commercial vessels above 5 000 gross tonnages regardless of their flag and promotes the use of renewable, low-carbon fuels and clean energy technologies for ships. It introduces increasingly stringent maximum limits for the yearly average greenhouse gas (GHG) intensity of the energy used by these ships and also introduces additional zero-emission requirements for ships at berth, mandating the use of on-shore power supply or alternative zero-emission technologies in ports.












4.2.


The focus of the industry will be on developing dependable propulsion systems, fuel technologies and fuel supply infrastructure, and subsequently introducing them to the market on a large scale. The EESC also points out that ‘one of the biggest obstacles to decarbonising the maritime sector will be the provision of the new bunkering infrastructure that will be required in ports around the world to supply ships safely with alternative fuels’ (5).












4.3.


Decarbonising maritime transport requires a holistic and technology neutral approach that properly considers all fuel options and their operational and societal impacts. However, the price, significant volumes, storage requirements and safety concerns associated with sustainable alternative fuels could hinder their uptake in shipping. For hydrogen, technological challenges must be addressed before its utilisation in deep-sea shipping. Sustainable liquid fuels have the advantage of using existing fossil fuel infrastructures for storage and transport.












4.4.


European maritime stakeholders have persistently advocated for the creation of a fund to utilise EU ETS revenues and FuelEU Maritime penalties to make zero-emission shipping and cleaner fuels commercially viable. Despite a dedicated maritime financial envelop in the Innovation Fund, financed by EU Emissions Trading System revenues, further efforts are needed to expedite zero-emission shipping and sustainable ship production. The administrative burden should be minimised to enable SMEs to apply to calls from the Innovation Fund.




5.   Access to resources









5.1.


The EESC highlights the risk of a potential shortage of available feedstock resources necessary for the transition. Availability of biomass, waste, residues, used cooking oil (UCO), animal fats etc. is limited and they are also used for other purposes. A holistic approach and structured dialogue with various industries (agriculture, chemicals, waste management, recycling etc.) are necessary to establish essential value chains.












5.2.


The EESC notes that there are conflicting studies on the quantity of sustainable biomass available in Europe for the transport sector and, therefore, questions Europe’s ability to be self-sufficient in this respect. It also acknowledges that the use of sustainable biomass should not endanger or compete with the primary use of feedstocks. Similarly, the EESC is concerned about Europe’s ability to supply the growing quantities of decarbonised energy needed to manufacture e-fuels. As such, the need to look at feedstock as a strategic component of the transition process must be seen as a priority.












5.3.


The hydrogen sector requires tangible public support and a consistent regulatory framework to attain full-scale competitiveness in the global market. While political strategies by the EU and its Member States already exist to expand green hydrogen production capacities, affordable technology is inexistent, and it remains uncertain whether upscaling can be achieved within reasonable timeframes and costs. In addition, questions remain as to availability, production costs, safety and infrastructure requirements.




6.   Funding and Investments









6.1.


Although ReFuelEU Aviation and FuelEU Maritime provide regulatory certainty, the producers of sustainable fuels indicate that bank loans remain hard to obtain and venture capital funds are still hesitant to invest in their projects. The EESC urges EU policymakers to offer increased incentives for immediate production and the creation of a real market for reduced carbon footprint fuels. Furthermore, regarding the taxonomy, the EESC believes that definitions of sustainable projects based on Environmental, Social and Governance (ESG) principles should be formulated to bolster financing for the energy transition and climate ambition. Additionally, EU and national policies that foster private investment and expedite the adoption of low-carbon and sustainable fuels are necessary to facilitate the transition towards a more sustainable energy future.












6.2.


The business case for investing in manufacturing capacity for sustainable biofuels and e-fuels for aviation and maritime is weakened when the allocation of co-products (such as bio or e-naphtha, bio or e-gasoline, bio or e-gasoil) is uncertain. To meet this challenge, it is therefore necessary to create markets for all bio- and e-fuels produced.












6.3.


The EU has established numerous funding mechanisms, including those that facilitate the development of a green hydrogen ecosystem, (e.g. the recently introduced Hydrogen Bank (6)). However, EU grants and subsidies lack adequate emphasis on the specific dimension of aviation and maritime, including for low carbon and renewable fuels infrastructure.












6.4.


Contracts for differences represent an effective mechanism to incentivise investments in technologies that currently lack competitiveness in terms of production costs, due to the selection of the most efficient producers through a reverse auction, subsequently subsidising fuels only up to the predetermined price. The EESC supports their introduction and considers that they will help stabilise prices and provide certainty for investors, thus supporting the growth of the sustainable fuels market.












6.5.


Investing in pioneering production facilities will involve inherent technological and commercial risks, resulting in financing costs for fuel providers. Hence, various forms of public financial assistance should be employed to mitigate these risks, including from European public investment funds, government resources and regional development banks. Additionally, first movers should have confidence in the payback time of their investments, relying on legal certainty and benefiting from framework conditions that de-risk and thereby stimulate their investments.












6.6.


To ensure higher and quicker uptake of low-carbon and renewable fuels, the EESC demands that taxation should align with the climate impact of each fuel. It endorses a Europe-wide proposal for a robust incentive mechanism based on very low or zero taxation on low-carbon fuels to facilitate socially acceptable fuel pricing while also encouraging investments into sustainable fuels.




7.   Research and Development (R&D)









7.1.


Additional R&D efforts are necessary to reduce the costs of advanced, low-carbon and renewable technologies and facilitate their commercialisation. The production of sustainable fuels requires the development of advanced industrial infrastructures, including technologies like high-temperature electrolysis and carbon capture technologies. In the short term, a clear roadmap for the industry switch is needed, including the integration of hydrogen, a substantial increase in the production of biofuels and the expansion of synthetic fuel production.












7.2.


The adoption of sustainable fuels must be based on implementing incentive and support mechanisms, establishing a coherent regulatory framework at both the European and international levels to foster a viable and efficient market, and engaging in long-term planning for any low-carbon and renewable fuels, including biomass and low-carbon electricity production. A dedicated strategy for fuel transition should be implemented in the long term, encompassing all components of the supply chain: feedstocks (sustainable biomass, waste, renewable electricity and recycled CO2), logistics for collecting and transporting feedstocks to manufacturing plants, and production facilities. A combination of converting existing refineries and installing new dedicated plants would safeguard EU demand capacity.












7.3.


The EESC calls on the European Commission to commit to providing sufficient long-term European funding for R&D for new technologies, including via Horizon Europe, the Innovation Fund, InvestEU, and the extension of existing sectoral partnerships for the aviation and maritime sectors. Breakthroughs in technology can help drive down costs and increase the competitiveness of renewable fuels. The EESC insists on social conditionality for all public funding to ensure that EU taxpayers’ money is being used responsibly.




8.   Social Aspects and Just Transition









8.1.


The large amounts of electricity, biomass and water necessary for the production of e-fuels may heighten scepticism among local communities regarding the technologies. In order to secure public acceptance, it is imperative to involve social partners and civil society extensively through an open and transparent informed dialogue, avoiding potential delays, legal ambiguity and expenses, while ensuring the social acceptability for sustainable fuels projects.












8.2.


The EESC demands awareness and educational initiatives at regional, national and EU level aimed at fostering a deeper comprehension of the necessity for renewable and low-carbon fuels, alongside emerging technologies, their advantages for local sustainability and future competitiveness. New jobs will be created, which should be quality green jobs, and the Committee anticipates the need for advanced skills development programmes across the supply chain, including complex vocational training programmes and support for job-to-job transitions that also involve the younger generation.












8.3.


In the long run, the requirement to progressively utilise sustainable aviation fuels is anticipated to elevate costs for airlines, further resulting in increased costs for passengers and air cargo shippers. The EESC draws attention to the social impact and, potentially, the impact on the competitiveness of European industry, especially in cases where international competitors are not obliged to comply with similar measures. Additionally, when designing aviation policies, it is essential to consider the reduced connectivity of European islands, remote territories and Member States that rely solely on air and/or maritime connections to the single market.












8.4.


When considering the green transition of Europe’s aviation and maritime sectors, it is essential to ensure that it is managed in a socially equitable way. A just ecological transition must be guaranteed to prevent regions, companies and workers being left behind, by providing for adequate skills development or upgrading, as well as transitions between jobs where necessary. Quality social dialogue at regional, national and EU level is essential.












8.5.


The EESC reiterates the need to guarantee high health and safety standards for all workers throughout the supply chain and at all stages of aircraft or vessel operation, particularly when introducing new ecological or digital processes and using new fuels.




9.   The competitiveness of European industry









9.1.


The EESC underlines the importance of maintaining and boosting the competitiveness of EU industry. The expected sustainable transformation of the maritime and aviation sectors must be supported by policies, funding, tax facilities etc. to keep industrial players at a highly competitive level internationally, especially since most economies outside the EU have yet to implement substantial climate measures. Maintaining a robust industrial foundation within the EU, supported by sectoral strategies, policies, funding and legislation, is essential to ensure prosperity and high-quality jobs.












9.2.


The EESC points out that further steps need to be taken to ensure a global playing field. Monitoring should take place to ensure that all international players are following the rules, for example fuel tankering for airlines. The EESC encourages the European Commission and Member States to press for all International Civil Aviation Organisation and International Maritime Organisation member states to make binding international commitments to decarbonisation.












9.3.


At the same time, incentives need to be put in place for fleet renewal to stimulate domestic demand and fleet retrofit, which should benefit European maritime and aerospace companies and workers. On the maritime sector, the EESC has recently called for a maritime industrial strategy, including ‘urgent measures that stimulate domestic demand for green and high-tech vessels, including an EU programme for fleet renewal and the retrofit of existing vessels […] and setting up a dedicated EU Maritime Fund’ (7). The Committee demands enhanced efforts to increase the share of ships registered under EU flags.






Brussels, 10 July 2024.


The President


of the European Economic and Social Committee

Oliver RÖPKE
               





(1)  
            Fuels Europe – Clean fuels for all.

(2)  
            IATA 2022 SAF Production Increases 200 % - More Incentives Needed to Reach Net Zero.

(3)  Opinion of the European Economic and Social Committee on the proposal for a Regulation of the European Parliament and of the Council on ensuring a level playing field for sustainable air transport (
OJ C 105, 4.3.2022, p. 134).

(4)  
            Aerospace Research Central - Considerations for Reducing Aviation’s CO2 with Aircraft Electric Propulsion.

(5)  Opinion of the European Economic and Social Committee on ‘Proposal for a regulation of the European Parliament and of the Council on the use of renewable and low-carbon fuels in maritime transport and amending Directive 2009/16/EC’ (
OJ C 152, 6.4.2022, p. 145).

(6)  
            European Hydrogen Bank.

(7)  Opinion of the European Economic and Social Committee on ‘An industrial strategy for the maritime technology sector’ (
OJ C 100, 16.3.2023, p. 31).


ELI: http://data.europa.eu/eli/C/2024/6019/oj
ISSN 1977-091X (electronic edition)