Gearing up for FuelEU Maritime

by James Helliwell, Decarbonisation Manager, V.

FuelEU Maritime (FuelEU) will come into effect on 1 January 2025 as part of the EU’s continued efforts to increase the uptake of renewable and low-carbon fuels. While the intended goal is clear, what remains less defined is the industry’s readiness and pathway to compliance.

However, on the whole the industry lacks readiness for the new rules and there is no room for a ‘wait and see’ approach. FuelEU comes with a robust and hefty penalty for non-compliance: the shipbroker BRS Group has calculated that FuelEU could cost the global tanker fleet more than €2bn by 2030 for poor performance, assuming penalties from the regulation stay at 2023 levels. Threats of such fines present a clear financial and regulatory case to proactively invest in decarbonisation.

Drawing lessons from the EU ETS, the industry has the benefit of hindsight. It is clear that collaboration will be key to regulatory success. In the maritime industry, the responsibility for compliance often falls on the ship manager. However, under the ‘polluter pays’ principle, all parties should work closely together to develop the most effective emissions reduction strategy for each vessel.

Compliance strategies for the here and now

With purely green fuels still unavailable at scale, there are several short-term compliance strategies for ship owners:

• Relying on the use of LNG, LPG, and biofuel blends – fuels that are below the GHG intensity limit set by FuelEU.
• Entering pooling arrangements with LNG-fuelled vessels or using biofuel-blended fuel oil on EU voyages.
• Borrowing compliance from future years, particularly for owners considering retrofitting their vessels with LNG dual-fuel systems. At V., we have already delivered webinars on the implications of retrofitting and continue to explore innovative strategies to support owners in this area.

There’s no ‘one size fits all’ compliance strategy. Deciding the best strategy for your operations is, ultimately, a data-driven decision that must account for fleet size, vessel type, segment, route and fuel availability. Shipping has no shortage of this data either; the biggest challenge it faces is in integrating and activating these data insights on one, intelligent platform.

Supporting ship owners in mapping out their compliance strategy, V. has extended its partnership with OceanScore, a data-driven solution for emissions monitoring and compliance. Building on our partnership for EU ETS compliance, we will now be able to provide an end-to-end digital solution for FuelEU compliance as well.

Understanding the need for tailored support, we’ve also expanded the remit of our EU ETS Centre of Excellence to include FuelEU Maritime compliance, providing solutions to assist owners with the full management of FuelEU requirements. We’re also actively investing in our own understanding of these regulations and have strengthened our partnership with the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping to ensure we’re staying ahead of the curve.

Regulatory viewpoint: What’s next for shipping’s decarbonisation pathway?

While there is still uncertainty around how the EU plans to use the revenue collected from penalties and taxes to accelerate the production of lower-carbon fuels, the general direction of travel is clear: it’s all hands on deck to reach net-zero.

To see further decarbonisation progress, however, we need action at the global-level from the International Maritime Organization. This is starting to take shape, as seen most recently at MEPC82, where nations inched closer to a consensus on what global regulations should look like.

Ultimately, as the ship manager, V. must respond to the market. But by providing advice to customers – particularly around the continued push towards the ‘polluter pays’ principle – we can play our part in ensuring the best course of compliance for each vessel.

We are proud to be a committed partner of progress for everything at sea, helping our clients navigate regulatory complexity to move towards a more sustainable future with confidence.

 

For more information, contact v.erde@v.group