FF55 Aviation and Maritime: REDIII, Refuel, and FuelEU

Coauthored by Michèle Koper.

On July 14, 2021, the European Commission adopted the Fit for 55 (FF55) package, which is a detailed set of proposals aiming to revise European Union (EU) legislation to align it to the EU's 2030 and 2050 binding climate goals under the European Green Deal. Among these, various proposals concern the decarbonization of the transport sector, including aviation and maritime. Within the updated Renewable Energy Directive (REDIII, revision of REDII) the full transport sector is addressed, covering road, rail, aviation, and maritime. 

The ReFuelEU Aviation regulation specifically aims at the aviation sector, and the FuelEU Maritime regulation targets decarbonization of the maritime sector. Although the three proposals target the transport sector, each proposal has its own scope, targets, timelines, and actors. The proposed target for REDIII has 13% greenhouse gas (GHG) intensity reduction based on supply in the transport sector, whereas ReFuelEU has a 5% blending obligation target for aviation, and FuelEU has a 6% GHG intensity reduction target based on demand in maritime. (On June 2, 2022, the European Council adopted a common position of the proposed FF55 packages where the ReFuelEU Aviation target was augmented to 6%.) These different approaches in implementation could lead to large variations in achievability of the overarching REDIII transport target in EU member states. 

Figure 1: Relative Market Size Based on Emissions in the Transport Sector in 2019

(Source: Guidehouse, Eurostat)

The lower targets from the two regulations for the aviation and maritime sector could put the remaining emissions reductions required for REDIII on the road sector, particularly for countries with a relatively small road sector (see Figure 1). Countries such as Belgium, the Netherlands, and Malta have a road sector that accounts for less than 50% of the emissions in the transport sector, in comparison with the EU average of 73%. Figure 2 visualizes what the road sector of each EU member state should contribute for REDIII if their aviation and maritime sector adhere only to their lower respective sectoral targets from the regulations. 

Figure 2: GHG Intensity Reduction in Road Transport to Reach REDIII Target if Maritime and Aviation Adhere to Their Minimum Targets (Not Accounting for e-Mobility in Road or Rail)

(Source: Guidehouse)

The EU average for road transport to decrease in GHG intensity in this scenario is 16%. Countries such as Greece, Cyprus, Belgium, the Netherlands, and Malta would have to decarbonize their road sectors at a much higher rate than the EU average. Countries with a relatively large road sector would have to decarbonize their road sector less strongly, as they do not have to compensate that much for maritime or aviation to reach the overarching 13% GHG intensity reduction in the transport sector. Slovakia and Romania are also examples of the latter. 

This situation could create competition within the countries, where the road, aviation, and maritime sectors have to compete internally to determine which will bear the costs to reach the 13% target and not necessarily lead to the most cost-effective decarbonization pathway. Also, among member states, this reality could affect the level playing field: countries with a relatively large road sector can afford to adhere to the minimum targets in maritime and aviation, and thereby could be more competitive in terms of fuel prices compared with the same sectors in neighboring countries. 

Guidehouse has performed a qualitative analysis on what these differences could mean to the different transport modes in the Dutch context and the international competitive position of the Dutch maritime and aviation sector. The full report can be found here.