EU ETS is just the tip of the Iceberg, with FuelEU Maritime fast approaching
While the EU ETS regulation is receiving considerable attention ahead of its implementation on January 1, 2024, FuelEU Maritime is a significant challenge that ship owners must consider carefully. We have seen how some have left it very late to prepare for EU ETS, and this is even more of a concern for FuelEU Maritime, which requires significant action from the shipping sector. Many key actors lack awareness of the intricacies of this new regulation, falling behind in understanding the adjustments necessary to adapt to this evolving landscape.
Baseblue’s team has extensive expertise and actively guides customers on the required stepsfocused on supporting owners and charterers in the here and now.
In spring 2023, the European Parliament (EP), Council of the European Union, and the European Commission (EC) finalised a political agreement on the FuelEU Maritime regulation as a key part of the EU’s “Fit for 55” package. The initiative aims to increase the demand for and consistent use of renewable and low-carbon fuels and reduce the greenhouse gas emissions from the shipping sector while ensuring the smooth operation of maritime traffic and avoiding distortions in the internal market to achieve the EU’s climate targets for 2030 and 2050.
Theregulation encompasses several key
- Measures to ensure that the greenhouse gas intensity of fuels used by the shipping sector will gradually decrease over time, from 2% in 2025 to as much as 80% by 2050.
- A special incentive regime to support the uptake of renewable fuels of non-biological origin (RFNBO) with a high decarbonisation potential.
- An exclusion of fossil fuels from the regulation’s certification process.
- An obligation for passenger ships and containers to use on-shore power supply for all electricity needs while moored at the quayside in major EU ports as of 2030 to mitigate air pollution in ports often close to densely populated areas.
- A voluntary pooling mechanism, under which ships will be allowed to pool their compliance balance with one or more other ships, with the pool – as a whole – having to meet the greenhouse gas intensity limits on average.
- Time-limited exceptions for the specific treatment of the outermost regions, small islands, and areas economically highly dependent on their connectivity.
- Revenues generated from the regulation’s implementation (‘FuelEU penalties’) should be used for projects the maritime sector’s decarbonisation with an enhanced transparency mechanism.
- Monitoring of the regulation’s implementation through the Commission’s reporting and review process
Timetable for compliance
Starting August 31, 2024, shipping companies must submit monitoring plans for their ships’ energy use assessment, detailing monitoring methods and reporting specifics.
From January 1, 2025, for ships trading in the EU or European Economic Area (EEA), and based on the chosen monitoring plan, each company will need to record the following information on an annual (1 January to 31 December) basis:
- Port of departure and port of arrival, including the date and hour of departure and arrival and time spent at berth.
- For container and passenger ships, the connection to and use of on-shore power or the existence of any of the exceptions.
- The amount of each type of fuel consumed at berth and sea.
- The well-to-wake emission factors for each type of fuel consumed at berth and sea are broken down by well-to-tank, tank-to-wake, and fugitive emissions, covering all relevant greenhouse gases.
- The amount of each substitute energy source consumed at berth and sea.
The GHG intensity requirement applies to 100% of energy used on voyages and port calls within the EU or EEA and 50% of energy used on voyages into or out of the EU or EEA.
Additionally, container ships stopping in transhipment ports outside the EU or EEA but less than 300 nautical miles from an EU or EEA port need to include 50% of the energy for the voyage to that port as well, rather than only the short leg from the transhipment port. The EU will provide a list of transhipment ports.
By March 30, 2026, this information must be submitted to verifiers. Companies may pool ships for reporting, which, once certified, cannot be altered. Penalties are imposed for non-compliance and port calls. Any surplus or deficit in compliance can be banked or borrowed with restrictions.
By April 30, 2026, reporting of compliance surplus/deficit and pooling must be recorded. Noncompliance penalties are levied on May 1, with funds allocated for maritime decarbonisation projects.
By June 30, 2026, a FuelEU certificate of compliance must be obtained for ships entering EEA ports; failure may result in a ban.
From January 1, 2030, container and passenger ships must connect to onshore power supplies at major EEA ports to meet zero-emissionrequirements. Exceptions exist for short stays or onboard zero-emission
The shipping company is responsible for ensuring compliance with the requirements of the FuelEU regulation. As per regulation EU 2015/757 (MRV), the ‘company’ means the shipowner or any other organisation or person, such as the manager or the bareboat charterer, who has assumed the ship’s operation from the shipowner.
Here and now
In this intricate landscape, proactive steps and forward-thinking initiatives are key to staying ahead of escalating costs and strategically determining the most commercially viable fuel procurement strategies. We at Baseblue are at the forefront of supporting clients in navigating the complexities of FuelEU Maritime and ensuring clients are positioned as early adopters of alternative fuels, such as LNG and HVO, offering a crucial advantage in managing the forthcoming regulations.
Our expertise lies in our ability to test and evaluate future fuels, identify their benefits and limitations, and share that knowledge with our clients. Baseblue canlong-term fuel strategies tailored to individual company needs for the next 5-15 years. Moreover, thanks to our in-house global risk management team and smart technology, we enable clients to make informed decisions by measuring consumption and GHG intensity, ensuring transparency and traceability while offering strategic advice to identify optimal purchasing opportunities, secure preferred fuels at crucial moments, and determine optimal refuelling locations.
Through proactive planning, comprehensive support, smart technology integration, and strategic insights, Baseblue remains a key partner in ensuring clients navigate the FuelEU Maritime directives successfully while optimising their fuel-related strategies for the future.