FuelEU Maritime is coming. Get ready with V.

From 31st January 2020, the United Kingdom left the European Union and therefore the FuelEU Maritime regulation does not apply.

The only part of FuelEU Maritime relevant to the UK is for vessels on voyages between the UK and a European port. FuelEU Maritime applies to 50% of the emissions produced on any voyage starting or ending outside the EU.

FuelEU Maritime makes the vessel’s Document of Compliance (DoC) holder responsible for FuelEU Maritime. This differs from EU ETS where the ship owner is the responsible party.

The regulation allows the DoC holder to enter into contractual agreements with the owner to cover some aspects of the regulation. This could include transferring responsibility to the owner for the payment of penalties and for making decisions on entering a vessel into pooling arrangements. The final submission of the required data for FuelEU Maritime to the FuelEU database however must be done by the DoC holder.

The EU regulation specifies that each member state is responsible for ensuring any outstanding balance of penalties for each ship is paid by the 30th June 2026 for the 2025 reporting year. Details are yet to be published on how the payment of penalties to the EU will be administered.

The approved verifier, which is usually an appointed classification society, is responsible for determining the amount of penalties due for each vessel based on the data submitted.

The regulations state that whoever is the DoC holder on the 31st December 2025 is responsible for paying the penalties for the previous reporting year. Commercial agreements will need to be developed between owners to ensure any balance of penalties are covered in the sale of any vessel.

The formula for calculating FuelEU allows two correction factors to be applied to give a slight reduction in penalties to ice class vessels, recognising the fact that ice classed vessels typically consume more fuel than other vessels of the same type and size.

One correction factor is a general factor to account for the additional energy used by ice class vessels on any voyage. The second correction factor allows an additional reduction in penalties only when a vessel can demonstrate operation in areas of ice.

V. is preparing guidance, procedures and training for its crews on how to store and handle biofuels safely should an owner wish to use biofuels when operating in the EU. This information and training will be given to crews during the second half of 2024 before FuelEU Maritime begins.

Unfortunately not. FuelEU only applies to vessels that visit EU ports and only these vessels are eligible to join a FuelEU Maritime pool.

This is very dependent on the fuel choice a vessel uses and whether they decide to join a pool or borrow compliance from a later year. A vessel using biofuels or LNG on a few voyages may have no penalties at all to pay under FuelEU. V. can support owners in modelling different scenarios and different fuel options to help owners understand their potential FuelEU penalties. Contact us at FuelEU@v.group

The EU have stated that they aim to use the penalties collected to fund projects that help accelerate the adoption of low carbon fuels in the maritime industry. They have not yet published details on how companies can apply for this funding.

Unfortunately, there are no correction factors for other technologies such as air lubrication or propulsion efficiency devices. Whilst these technologies are not directly included in the formula for calculating FuelEU penalties, they can still help to reduce the overall value of penalties due by reducing the amount of fuel consumed onboard the vessel.

If the fuel is manufactured from a crop that has been grown solely for the purpose of being used in biofuels then it is not eligible for any benefit under the FuelEU Maritime regulations. Vessels using crop-based biofuels would be treated as using VLSFO under the regulation. Only biofuels from waste products such as used cooking oil are eligible.

This will depend on the type of charter the vessel is operating under. If the vessel is on a long-term charter and the charterer is providing the fuel, then it is likely that they will make the decision on how to maximise the opportunity from a vessel. On long term charters the charterer could chose to provide lower carbon fuels and gain significant benefit from entering that vessel is a pool.

For vessels on the spot market it becomes a lot more complex, as no single charterer is responsible for the entire years performance of that vessel. Charter party clauses will likely be negotiated to specify how penalties and pooling will be managed between entities.

In any event, whoever is the DoC holder on the 31st December each year is responsible for supporting the required data to the verifier and paying any penalties due for the entire year.

Yes, the responsibility for FuelEU Maritime lies with the DoC holder, whereas the responsibility for EU ETS usually sits with the ship owner. The two regulations will also have separate reporting systems to upload the data required.

Whilst the regulations are handled separately, using lower carbon fuels on a voyage can reduce penalties both in EU ETS and FuelEU Maritime.

Biofuel blends such as B24 or B30 are readily available in major bunker locations such as Singapore or Rotterdam. LNG is also below the FuelEU GHG intensity limit, and there is a global supply of LNG available for bunkering.

There is very limited availability of pure B100 biofuel and methanol, although some operators having run pilots recently to test engine performance using these fuels. There is almost no availability of hydrogen or ammonia as a bunker fuel today, although the EU hope that funding made available from FuelEU penalties will help to build investment in these new fuels.