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EU Fit for 55: Council of European Union reaches general approaches relating to emissions reductions

Council agreed to include maritime shipping emissions within the scope of the EU emissions trading system and introduced an opt-in for all fossil fuels.

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The Council of the European Union on Wednesday (29 June) adopted its negotiating positions (general approaches) on important legislative proposals in the ‘Fit for 55’ package and is now ready to negotiate with the European Parliament on concluding the package. 

The member states adopted a common position on EU emissions trading system (EU ETS), effort-sharing between member states in non-ETS sectors (ESR), emissions and removals from land use, land-use change and forestry (LULUCF), the creation of a social climate fund (SCF) and new CO2 emission performance standards for cars and vans.

These agreements will pave the way for negotiations with the European Parliament.

Presented by the European Commission on 14 July 2021, the package will enable the European Union to reduce its net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels and to achieve climate neutrality in 2050.

“The achievement, led by the French Presidency, of an agreement between the member states on the ‘Fit for 55’ package is a crucial step in attaining our climate objectives within the main sectors of the economy,” said Agnès Pannier-Runacher, French Minister for the energy transition.

“The ecological and energy transition will require the contribution of all sectors and all member states, in a fair and inclusive manner. The Council is now ready to negotiate with the European Parliament on concluding the package, thereby placing the European Union more than ever in the vanguard of fighting climate change,” she said. 

EU emissions trading system

The EU Emissions Trading System (ETS) is a carbon market based on a system of cap-and-trade of emission allowances for energy-intensive industries and the power generation sector.

The Council agreed to keep the overall ambition of 61% of emissions reductions by 2030 in the sectors covered by the EU ETS, proposed the Commission.

The Council also agreed to a one-off reduction of the overall emissions ceiling by 117 million allowances (“re-basing”) and to the increase in the annual reduction rate of the cap by 4,2% per year (“linear reduction factor”).

The Council endorsed the proposal to strengthen the market stability reserve (MSR), by prolonging, beyond 2023, the increased annual intake rate of allowances (24 %) and setting a threshold of 400 million allowances above which those placed in the reserve were no longer valid.

The Council agreed to make the launch of the mechanism that activates the release of MSR quotas on the market, in case of excessive price rise, automatic and more reactive.

As regards sectors covered by the Carbon Border Adjustment Mechanism (CBAM), the Council endorsed the proposal to end free allowances for the sectors concerned by the CBAM progressively, over a ten-year period between 2026 and 2035. However, the Council accepted a slower reduction at the beginning and an accelerated rate of reduction at the end of this 10-year period. Support for the decarbonisation of these sectors will be possible through the Innovation Fund. The Council also asked the Commission to monitor the impact of the CBAM, including on carbon leakage at export, and to assess whether additional measures were needed.

As regards the Modernisation Fund, the Council maintained the increase in its volume through the auctioning of an additional 2.5 % of the ceiling, the increase in the share of priority investments to 80 % and the addition of new eligible sectors, as proposed by the Commission. The Council decided to extend the list of member states benefiting from the Modernisation Fund. Natural gas projects will in principle not be eligible for the Fund. However, the Council introduced a transitional measure allowing the beneficiaries of the Fund to continue financing natural gas projects under certain conditions.

The Council also strengthened certain provisions of the Innovation Fund, in particular as regards the capacity aimed at making participation in projects more effective and geographically balanced, while preserving the principle of excellence in project allocation. The Council agreed to pay particular attention to decarbonising the maritime sector under the Innovation Fund.

The Council improved the governance and transparency of both funds.

An additional transitional free allocation can be granted under certain conditions to the district heating sector in certain member states subject to certain conditions, in order to encourage the decarbonisation of that sector.

The Council agreed to include maritime shipping emissions within the scope of the EU ETS. The general approach accepts the Commission proposal on the gradual introduction of obligations for shipping companies to surrender allowances. As member states heavily dependent on maritime transport will naturally be the most affected, the Council agreed to redistribute 3.5 % of the ceiling of the auctioned allowances to those member states. In addition, the general approach takes into account geographical specificities and proposes transitional measures for small islands, winter navigation and journeys relating to public service obligations, and strengthens measures to combat the risk of carbon leakage in the maritime sector.

The general approach includes non-CO2 emissions in the MRV regulation from 2024 and introduces a review clause for their subsequent inclusion in the EU ETS.

The Council agreed to create a new, separate emissions trading system for the buildings and road transport sectors. The new system will apply to distributors that supply fuels for consumption in the buildings and road transport sectors. However, the start of the auctioning and surrender obligations will be delayed by one year compared to the Commission proposal (auctioning of allowances from 2027 onwards and surrender from 2028 onwards). The emissions reduction trajectory and the linear reduction factor set at 5.15 from 2024 and 5.43 from 2028 would remain as proposed by the Commission. The Council maintained the proposal to auction an additional 30% of the auction volume for the first year of the launch of the system, so that it runs smoothly (“frontloading”).

The Council introduced an opt-in for all fossil fuels. It introduced simplified monitoring, reporting and verification requirements for small fuel suppliers.

The Council added a temporary possibility for member states to exempt suppliers from the surrender of allowances until December 2030, if they are subject to a carbon tax at national level, the level of which is equivalent or higher than the auction price for allowances in the ETS for the buildings and transport sector.

The Council agreed to phase out free emission allowances for the aviation sector gradually by 2027 and align the proposal with the global Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The EU ETS will apply for intra-European flights (including the United Kingdom and Switzerland), while CORSIA will apply to EU operators for extra-European flights to and from third countries participating in CORSIA. The Council agreed to set aside 20 million of the phased-out free allowances to compensate for the additional costs associated with the use of sustainable aviation fuels (SAFs). In addition, the Council agreement takes into account specific geographical circumstances and, in that context, proposes limited transitional derogations.

Note: The full statement by Council of the European Union can be viewed here

 

Photo credit: Guillaume Périgois on Unsplash
Published: 30 June, 2022

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Alternative Fuels

Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

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Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Taiwanese shipping firm Yang Ming Marine Transport Corporation (Yang Ming) and South Korean shipbuilder Hanwha Ocean on Wednesday (2 September) signed a shipbuilding contract for six 13,000 TEU class LNG dual-fuel container vessels. 

The contract was signed by Dr. Chuck Tsai, Chairman of Yang Ming, and Mr. Charles Kim, CEO of Hanwha Ocean. The vessels are scheduled for delivery between 2028 and 2029. 

They will complement Yang Ming’s existing fleet of 10,000+ TEU vessels and serve as key vessels on East-West services, with deployment flexibility across trade lanes connecting Asia with the East and West Coasts of North America, South America, and the Mediterranean. 

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

“As Yang Ming transitions toward net-zero emissions, LNG provides a relatively mature and economically viable alternative fuel solution, capable of reducing greenhouse gas emissions by approximately 20%,” the company said. 

“At the same time, ammonia can serve as a carbon-free fuel by utilising converted LNG storage facilities, while offering relatively lower conversion costs and comparatively well-developed supply chains and infrastructure. The Ammonia Fuel Ready design will therefore provide Yang Ming with greater flexibility in responding to increasingly stringent international regulations on greenhouse gas emissions.”

In addition, the vessels will be equipped with Type B LNG fuel tanks with a design pressure of 1.0 bar to enhance the safety and efficiency of LNG operations, together with a range of energy-saving technologies, including Wind Shields, Rudder Bulbs, Pre-Swirl Stators, and Shore Power Systems. Smart ship technologies and cybersecurity protection features will also be incorporated to enhance operational efficiency, safety, and reliability while effectively reducing fuel consumption and greenhouse gas emissions.

Deliveries under Yang Ming’s next-generation fleet optimization plan commenced earlier this year. By 2030, a total of 24 new vessels are expected to enter service. 

This includes 18 LNG dual-fuel vessels—comprising five 15,500 TEU, seven 16,000 TEU, and the six 13,000 TEU vessels under this contract—alongside six 8,000 TEU methanol dual-fuel-ready ships. 

 

Photo credit: Yang Ming Marine Transport
Published: 4 September, 2026

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Alternative Fuels

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Both secured AiP for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

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LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Lloyd’s Register (LR) and the Marine Design and Research Institute of China (MARIC) on Thursday (3 September) have secured Approval in Principle (AiP) for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Announced at SMM 2026, the concept addresses one of the biggest investment challenges facing shipping today: the need to develop vessels and capabilities that can support a range of alternative fuel options and pathways as technologies, infrastructure and regulations evolve.

While LNG is already a mature fuel pathway, methanol and ammonia remain at an earlier stage of development, with questions around global fuel availability, infrastructure development, economics and long-term adoption.

The 114,000 DWT tanker concept has been designed as a product and crude oil carrier that can accommodate future conversion to LNG, methanol or ammonia as technologies, regulations and fuel supply chains mature. By incorporating conversion readiness at the design stage, the concept aims to reduce future retrofit complexity and provide owners with greater confidence when planning long-term fleet investments.

The design concept was reviewed against LR’s July 2026 class rules and regulations, including requirements relating to ships using gases and other low-flashpoint fuels, alongside relevant IACS Common Structural Rules for oil tankers. Final classification and statutory approval remain subject to full compliance with all applicable rules and regulations.

Theo Kourmpelis, Global Business Director for Tankers, Lloyd’s Register, said: “Shipowners are being asked to make major investment decisions today despite continued uncertainty around which fuels will dominate in the decades ahead. Alternative fuel solutions each offer potential pathways to compliance, but fuel infrastructure, regulation and economics continue to evolve at different speeds around the world.

“Designs that preserve flexibility will be critical in helping owners manage risk while preparing for multiple future scenarios.”

Si Nan, Marine & Offshore Marketing Department Vice Director, MARIC, said: “As the industry explores different decarbonisation pathways, shipowners need vessel designs that can adapt alongside technological and regulatory developments. This concept was developed specifically to provide greater fuel flexibility and long-term resilience, allowing owners to respond to changing market requirements without being locked into a single fuel strategy.

“Receiving Approval in Principle from Lloyd’s Register is an important milestone that validates the design concept and supports its future development.”

 

Photo credit: Lloyd’s Register
Published: 4 September, 2026

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Alternative Fuels

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.

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DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.

This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.

LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.

The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.

LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).

Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.

“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains. 

“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve. 

“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”

Screenshot 2026 09 04 at 12.29.26 PM Screenshot 2026 09 04 at 12.29.36 PM

 

Photo credit: DNV
Published: 4 September, 2026

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