Can Europe’s new e-fuel strategy for maritime help solve the fuel availability conundrum?

The European Commission (EC) estimates that 20M tonnes of sustainable alternative fuels will be needed by 2035 for the aviation and maritime sectors combined. World Shipping Council’s EU Shipping Decarbonisation Report, released in 2025, estimates that the maritime sector alone could uptake 14.4M tonnes of oil equivalent of renewable fuels by 2035.

There is clearly not only competition between aviation and maritime for low-carbon fuels, but also an urgent need for action, at least to help maritime comply with the Fuel EU Maritime Regulation, the Renewable Energy Directive and the EU Emissions Trading Scheme for maritime.

How does the STIP help to overcome these challenges?

The STIP reaffirms the EC’s commitment to supporting maritime decarbonisation and brings together targeted measures to boost investment in renewable and low-carbon fuels across Europe, both in the short and long term. The EU measures under this plan are expected to mobilise at least €2.9Bn (US$3.5Bn) by the end of the current MFF period in 2027.

• Innovation fund: the EC has allocated €293M for maritime fuel projects.
• Hydrogen bank under innovation fund: the EC has launched a dedicated funding window with a budget of €300M to support the production of sustainable aviation and waterborne fuels. The auction was opened in early December 2025, with applications closing in early 2026.
• InvestEU: the EC expects to mobilise investment of around €2.0Bn for sustainable alternative fuels until 2027 under the InvestEU.
• Horizon Europe: around €133M will be mobilised under a new SET Plan flagship and the next Horizon Europe call for 2026 to support R&I projects.

These projects will look at derisking renewable fuel technologies and value chains at the EU, national, regional and local levels.

Different technologies, same system logic

STIP has identified a considerable need for investment and transformation in the maritime sector. The starting point is technologically complex: different types of ships, global route structures and widely varying energy requirements necessitate a broad mix of potential fuel options – from methanol and ammonia to hydrogen and advanced biofuels. For project developers and investors, this creates a starting situation in which technological decisions, infrastructure requirements and future operating costs must be considered simultaneously.

The key challenge is to build production capacities for renewable and low-carbon fuels and the associated port and bunkering infrastructure in parallel. Many projects are still in the process of reaching a final investment decision because regulatory requirements, technical standards and purchase conditions are only gradually being specified. Early regulatory clarity and long-term purchase commitments are therefore essential for the bankability of large-volume maritime projects. While consumers prefer short-term off-take agreements to maintain offer flexibility and price security, producers require long-term certainty of supply. To bridge this gap, the STIP proposes new instruments to resolve the conflicting interests and to bridge the price gap, such as double-sided auctions, among others.

Double-sided auctions – a potential breakthrough?

Competitive bidding mechanisms such as double-sided auctions are being proposed as a key solution in the sustainable marine fuels (SMFs) conundrum. These are in addition to contracts for difference, carbon contracts for difference and ’revenue certainty mechanisms’ that have already been put in place by member states.

Double-sided auctions use a market intermediary to connect fuel producers and buyers, by offering long-term contracts (eg 10-15 years) with producers of fuels on one side, and by concluding short-term contracts (eg 1-3 years) with buyers of sustainable aviation fuels (SAFs) or SMFs for the offtake of these fuels on the other side. They provide promoters with the revenue certainty needed to secure financing for the construction of new production facilities, while taking on the financial risks of refinancing through a series of shorter-term offtake contracts. Provided the tripartite contracts needed to enable double-sided auctions are sufficiently robust and carefully drawn up to derisk investment for all parties, this may well become a viable option in the mix of available funding solutions for SMFs in the coming decade and beyond.

Incentives to help meet Fuel EU Maritime targets

The availability of SMFs is central to meeting compliance with Fuel EU Maritime targets. In the STIP, the Commission not only pledges to continue to do further work with member states to incentivise the supply of SMF to help meet Fuel EU targets while avoiding market distortions, but will also continue to promote the availability of SMF in EU ports via measures that are be announced in the upcoming Energy Union package due to be published in the second half of 2026.

Streamlining maritime regulations

In 2026, the EC plans to amalgamate EU MRV, EU ETS and FuelEU into a single monitoring, reporting and verification framework (MRV) for maritime decarbonisation with a view to reducing administrative burdens for shipping companies, verifiers, and member states. This will be considered in the upcoming review of the EU ETS, MRV and FEUM, with legislative proposals planned by July 2026. Furthermore, the future EU Ports Strategy, to be adopted in Q2 2026, will support ports in fulfilling their roles in the energy transition and energy hubs. The EU Industrial Maritime Strategy, to be adopted jointly with the Ports Strategy, will strengthen Europe’s maritime manufacturing and technological base, especially in new technologies, driven by the increased use of sustainable fuels. More specifically, the EC has identified strategic ports worldwide (eg in Latin America, sub-Saharan Africa and Asia) that have strong SMF production and bunkering potential. As such, the EC plans to accelerate the deployment of SMFs by contributing to the establishment of green shipping corridors and hubs. The Global Gateway Green Shipping Corridors initiative is in its early stages of implementation, with the EU prioritising partnerships to decarbonise maritime transport. Finally, the Commission is proposing to allow for the possibility of awarding direct grants to private entities in support of projects that are in the strategic interest of the EU. This would benefit both the aviation and maritime sectors.

EU ETS revenues

Maritime transport was included in the EU ETS from 1 January 2024. The EU ETS Directive requires member states to use revenues from the EU ETS to invest in climate measures, renewables and low-carbon fuels. The Commission has earmarked 20M allowances specifically for the maritime sector to be deployed up to 2030. Based on an approximate carbon price of €80 per allowance, this translates to roughly €1.6Bn intended for maritime decarbonisation projects up to 2030. However, there are no specific examples yet available on how each member state is deploying EU ETS funds for maritime.

Conclusion

While the STIP plan aims to mobilise €2.9Bn (US$3.3Bn) over the next two years to encourage the production and uptake of SAFs and SMFs, the amount is still a far cry from the €100Bn the European Commission estimates shipping and aviation must invest by 2035 to produce the 20M tonnes of renewable and low-carbon fuels they need.

For investors, industry players and financial institutions, this means that location decisions, supply chains and contract models must be closely linked to the political roadmap. The decisive factor will be how regulatory requirements, support instruments and market mechanisms are combined to make projects bankable – especially in the case of off-take models, the use of support programmes and the hedging of price and volume risks.

Thus, while the STIP does not create an immediately functional market, it does lay the foundation for one promising to reshape investment, introduce new market mechanisms and streamline regulation to boost the availability and uptake of SMFs. The decisive factor will be how quickly political declarations of intent are translated into binding instruments. Success will depend on whether the regulatory framework, infrastructure planning and capital market mechanisms mesh in time. The coming years will no doubt show whether Europe can achieve the necessary pace to position itself sustainably in global competition.