FuelEU Maritime: a catalyst for bio-LNG market growth

The FuelEU Maritime regulations aim to reduce greenhouse gas intensity of marine fuels through progressively stricter limits. Starting with a 2% reduction in 2025, the regulation targets an 80% reduction by 2050 compared to 2020 levels. Ships exceeding GHG intensity limits face penalties of €2,400 per tonne of fuel consumed in excess.

Read on to learn how this regulation presents opportunities for bio-LNG producers, or fill out the form to access the full complimentary report.

Opportunities for bio-LNG producers

By 2050, FuelEU Maritime could drive demand for over 12 billion cubic metres of bio-LNG. This equals more than half of Europe's projected biomethane production capacity. Bio-LNG's compatibility with existing LNG infrastructure provides advantages over alternative fuels like ammonia and methanol.

Production follows two main routes. Dedicated liquefaction plants co-locate with biomethane production. Gas grid-based production leverages certification systems. Current European dedicated bio-LNG capacity remains limited at approximately 0.15 bcm as of 2024. The gas grid-based route offers greater scaling potential but requires robust cross-border certificate trading and regulatory clarity.

Policy support proves crucial through mandates, tax exemptions, and GHG emission intensity targets. The market faces substantial challenges including scaling requirements and high production costs. Production costs range from US$7-50/mmbtu with upside risk around feedstock price shocks compared to fossil fuels. Meeting EU 2030 targets would require building over 1,000 plants annually at an estimated US$80 billion investment.

Market fragmentation complicates development, with heavy reliance on subsidies creating compliance complexities. Competition between maritime and domestic industrial consumption will likely support long-term price development. Countries with established biomethane industries and LNG import infrastructure are well-positioned to lead bio-LNG production. Italy and the Netherlands show particular promise.

Fill out the form to continue reading and explore:

• Bio-LNG production pathways

• The policy framework and market drivers

• The competitive landscape

• Market challenges and future outlook