In 2022 the Government amended the RTFO to include seagoing vessels fuelled by Renewable Fuels of Non-Biological Origin (eg hydrogen / ammonia / methanol) as a relevant transport sector, although the maritime sector is not obligated.
We fully support the decarbonisation of maritime but it should have its own mechanism. We do not support the RTFO being extended to incorporate general maritime transportation in a manner which uses it as a proving ground for novel fuels such as hydrogen, ammonia and methanol, for the following reasons:
- The RTFO should not add additional demand without proportionately increasing the targets, as this dilutes the ability of the RTFO to decarbonize road transport.
- It places the costs on motorists, and this is against the polluter pays principle. Furthermore if the development fuels target were to be met then the sub target would have to be increased in order that the value of dRTFCs does not fall. This would end up increasing the costs which fall on a diminishing pool of motorists. We accept that this may be a risk that will not manifest itself for some time, but why build it in if it can be avoided by implementing a targeted maritime fuel obligation rather than tacking it on to the RTFO?
- Any effective marine decarbonisation mechanism should incorporate biofuels and recycled carbon fuels.
To expand on the second bullet point above, it is acknowledged that it is not sustainable to expect the motorist to pay for aviation d-fuels in the medium to long run, and a separate Sustainable Aviation Fuel mandate will be implemented. Once the SAF Mandate is in place it is envisaged that aviation fuel will come out of the RTFO (i.e. no longer be eligible for RTFCs). Hopefully this process will not cause problems, but there are potential difficulties. Recreating the same scenario with shipping makes no sense.
Even if the above concerns were addressed, i.e. the change was accompanied by a commensurate increase in a sectoral blending target and maritime operators became obligated, then it would probably be safer to replicate the RTFO for the maritime sector than expand the present RTFO to incorporate it.
It is already extremely difficult to finance a production facility based on the income stream from d-RTFCs and more pragmatic treatment of input electricity from hydrogen can only make the value of d-RTFCs more unstable and prone to falling.