On 23 June 2025, the government released a draft of the decree implementing RED III. The decree broadens the scope and puts a premium on emissions reductions and sustainability.
An innovation by RED III (2023/2413), the transport targets are now specified as a percentage emission reduction (comparing average fuel carbon intensity, gCO2eq/MJ, to a fossil fuel standard) rather than a renewable energy share.
The ERE would now become the new compliance tool to achieve these targets, replacing the existing HBEs. A brief comparison is given below:
Two additional sectors are now obligated for emission reduction targets: maritime and inland shipping. The maritime sector’s targets are likely to involve significant overlap with FuelEU Maritime, while the inland shipping sector is now obligated under national law (vessels likely falling below FuelEU Maritime thresholds).
Overachievement in the road sector can be credited towards the two shipping sectors although this has caps. However, road sector obligations can only be met with road sector EREs. Overall, the road sector would still be the main focus; while both navigation and road transport have similar energy usage (both around 10 Mtoe annually according to Eurostat), the road sector is expected to achieve triple the unit reduction by 2030 (27.1% versus 8.2%).
Aviation has no ERE obligations, with the draft decree referring to the “Lex Specialis” status of ReFuelEU aviation, giving the EU-wide scheme overriding status for renewable energy mainstreaming.
The draft also looks to phase out the explicit ‘double crediting’ mechanisms for certain fuels, mainly those from waste (RED Annex IX Part A) feedstock. However, these advanced fuels will receive preferential treatment via a sub target and uncapped attribution.
Conversely, conventional biofuel is capped to 1.4% of the final transport sector consumption in 2020, equating to a 1.2% emission reduction. Furthermore, only low-ILUC fuels can count towards this restricted amount, with the problematic feedstocks of palm and soybean oil only counting by exception.
The counting of emission reductions places a premium on biomethane from feedstocks with very low CI, whereas previously there was no incentive to go beyond threshold reductions (65%).
Biomethane from manure, having a negative CI, stands the most to benefit. This would make it similar to the German THG-quota, where manure biomethane often receives the highest premiums in Europe for any application. However, unlike the current THG-quota, the lack of multipliers for advanced biofuels EREs may temper expectations; the eventual practical implementation of the sub target will determine how bullish demand will become.
Stay ahead in renewable energy and carbon markets.
Sign up to receive expert analysis, market insights, and key policy updates—straight to your inbox, for free.
Specialising in data, analysis, and insights for all significant low-carbon markets and renewable energy.
