EU initiatives to enhance green fuels for aviation and shipping, yet raise concerns with delayed 2040 climate target

European green transport group Transport & Environment (T&E) has praised the new European Union (EU) initiatives aimed at reducing energy costs by increasing the deployment of renewable electricity and enhancing trade and investment in clean technology.

Despite this, T&E expressed concern over the EU’s decision to postpone proposing a climate target for 2040, viewing it as an alarming signal. The announcements also included a Clean Industrial Deal focusing on domestically producing renewable fuels for aviation and shipping.

However, T&E criticized the EU Commission’s hurried proposals that aim to dilute the sustainability reporting rules, which ensure corporate accountability for environmental and social impacts.

The EU’s Action Plan on Affordable Energy seeks to significantly boost electrification in the economy, targeting a rise from 23% to 32% by 2030.

Nevertheless, the European Commission did not follow through on its commitment to present a 2040 emissions reduction target, a year after confirming its intentions. T&E warned that deviating from the anticipated -90% target could undermine the investment certainty needed for European carmakers, airlines, and shipping firms to commit to clean technology.

Faig Abbasov, T&E’s shipping director, commended the Clean Industrial Deal as a positive move recognizing green hydrogen-derived fuels’ crucial role in decarbonizing shipping and aviation. However, he noted the lack of details on bridging the cost gap between fossil fuels and greener alternatives, and the absence of extended and significant offtake commitments. He suggested that the Sustainable Transport Investment Plan should address these gaps to ensure green fuels do not fall behind.

Ports of Rotterdam and Antwerp-Bruges call for Clean Industrial Deal swift implementation

T&E also commented on the reform of state aid rules announced today, stating they are insufficient to support EU-produced clean technology or local supply chains effectively.

The organization emphasized the need for the upcoming Clean Industry State Aid Framework to promote European manufacturing through targeted and conditional state aid.

Without imposing ‘Made-in-EU’ standards or a performance-based aid approach, Europe may struggle to develop its local clean technology industry.

Additionally, the Commission plans to use more trade defense instruments and boost EU investment in clean technology.

T&E supported adding conditions to foreign direct investment but called for better-designed financial instruments, as evidenced by the struggling Hydrogen Bank.

T&E also welcomed the introduction of a labeling system to track the carbon intensity of industrial products, starting with steel in 2025.

Julia Poliscanova, senior director for vehicles and emobility supply chains at T&E, stressed the urgent need for action to support faltering European battery companies. She argued that a green labeling system could highlight Europe’s capabilities as a sustainable manufacturer of steel and batteries, but more details are necessary on how labeling and local content requirements will be implemented. She also stated that the planned overhaul of state aid rules is insufficient for the EU to build up its clean tech manufacturing capabilities.

Lastly, T&E strongly criticized the so-called Omnibus proposal, which it claims weakens existing rules that hold companies accountable for their environmental and social impacts.

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