Regulatory instruments for emerging hydrogen and low-carbon fuel markets: The case of shipping

This paper provides an up-to-date overview of legislation focused on the development of markets for hydrogen and other low-carbon fuels in the European shipping sector. We discuss the physical properties of a selection of these fuels and the current technical and economic hurdles they face for wider adoption in the shipping sector. These attributes, which strongly influence production, transport, and storage costs for each fuel, will engender different market architectures depending on which fuels prevail. Drawing upon lessons from the natural gas industry, we offer insights about economic regulations that will encourage competition and the efficient utilization of infrastructure across these potential market architectures. Given the uncertain future of markets for low-carbon shipping fuels, we encourage policymakers to think proactively about economic regulations and consider adjustments as these markets come into sharper focus in the coming years.