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Europe is losing ground in the race to produce net zero fuels as the instability of fossil fuel supply makes it necessary for the continent to remain competitive in developing alternatives. According to the European NGO Transport & Environment (T&E), the lack of European offtake agreements is hampering the development of these fuels, putting the region at risk of falling behind China, which has fewer projects but is producing more energy.
T&E told Seatrade Maritime News that maritime transport is a global sector and green e-fuels will be required globally to decarbonise it. China’s recent investment confirms the role these fuels will play for decarbonisation. The shift to net zero fuels signifies the transition away from the sector’s reliance on imported fossil fuels that have become less reliable and stable due to the various crises and conflicts in recent years.
Commercial viability is critical in the development of e-fuels. Martin Crawford-Brunt, founder of consultancy Lookout Maritime, pointed to the profits made by sustainable aviation fuel leader Neste. Neste saw a profit spike largely due to Middle East uncertainty in the first half of this year. The company’s H1 profits were up from €551 million in the first half of last year to €2.06 billion this year.
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“Neste shows that there is a business case for e-fuels,” said Crawford-Brunt. Even so, statistics released by T&E reveal that Europe has 69 projects planned for alternative fuels, many targeting maritime operators. These are projected to produce 4.09 million tonnes of oil equivalent (Mtoe) energy. By comparison, China has 15 e-fuel projects with an estimated output of 1.72 Mtoe by 2029.
While China has three operational projects, a further 10 are under construction and two more are past the final investment decision (FID) stage. In Europe, only three projects are operational, one has confirmed its investment decision, while all 65 other projects have FIDs pending. This lag suggests that owners need clearer signals as to the direction of travel for alternative fuels before they can make major investments.
Shipping in Europe has been slow to commit to alternative fuels, and regulatory uncertainty around the EU ETS and global regulations are also delaying investment. Crawford-Brunt believes that it will take regulatory certainty to drive binding offtake agreements. He says these are largely driven by land-based investment decisions, with maritime and aviation requiring just 10% each of the available energy.
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Strategic dependence on unstable routes
That is not just about the economics of fuel, it is also about the geopolitical tensions created by dependency on strategic energy supply. “Green and alternative fuels are a growing market, Europe should become a clean fuel producer in its own right to supply its bunker hubs, especially as these fuels become an important strategic asset, to avoid dependence on fuels imported via increasingly unstable shipping routes,” said a T&E spokesperson.
It is a question of keeping pace, ensuring supply and investing in future energy sources rather than switching one dependency for another.
The disparity between European ambition and Chinese execution highlights a growing vulnerability. While European companies grapple with the slow pace of regulatory approval and investment decisions, Asian competitors are moving forward with construction and operation. This lag creates a gap that could be difficult to close without immediate, coordinated policy support to guarantee long-term demand. Without these assurances, European projects risk remaining on paper while the market moves toward green production elsewhere.
