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FuelEU Maritime: What It Means for Shipping Companies and How to Prepare
The maritime sector is facing one of its most significant regulatory shifts in recent history. The FuelEU Maritime regulation, set to take effect on January 1, 2025, will fundamentally change how ships operating within the European Union (EU) approach fuel consumption and emissions. As shipping companies look ahead, preparing for this regulatory framework is crucial to maintaining competitiveness, avoiding penalties, and contributing to global decarbonization efforts.
What is FuelEU Maritime?
FuelEU Maritime is a European regulation aimed at reducing the greenhouse gas (GHG) intensity of maritime fuels used by ships. The regulation introduces binding targets to cut GHG emissions from ships over time, starting with a modest 2% reduction in 2025 and escalating to 80% by 2050.
The regulation applies to all ships above 5,000 gross tonnage (GT) calling at EU ports. It encompasses 100% of emissions from voyages within the EU and 50% of emissions from international voyages entering or leaving the EU. The regulation also mandates that container and passenger ships connect to onshore power from 2030, further reducing emissions while in port.
The Key Challenges for Shipping Companies
1. GHG Emission Targets
One of the primary challenges shipping companies will face is adhering to strict GHG intensity reduction targets. These reductions are calculated on a well-to-wake basis, meaning the entire lifecycle of the fuel, from production to consumption, is taken into account. This requires companies to not only focus on energy efficiency on board but also on the type and sourcing of fuels used.
2. Compliance and Monitoring
To comply with FuelEU, shipping companies need to submit a detailed FuelEU Monitoring Plan by August 31, 2024. This plan will detail how each ship intends to monitor and report emissions. By January 31 each year, companies must submit their verified emissions data to an accredited verifier, with full-year compliance reports being recorded in the FuelEU database by March 31.
Any ship failing to meet the GHG intensity targets will face penalties of EUR 2,400 per tonne of non-compliant fuel used.
3. Fuel Availability and Certification
Switching to compliant fuels will be another hurdle. FuelEU encourages the use of alternative fuels such as biofuels, renewable fuels of non-biological origin (RFNBOs), and recycled carbon fuels. However, the availability of these fuels and the infrastructure to support them will vary across regions. Furthermore, these fuels must meet stringent sustainability and certification requirements, which means shipowners must ensure that their fuel suppliers provide appropriate documentation.
4. Commercial and Contractual Impacts
FuelEU will not only affect day-to-day operations but also impact the commercial aspects of shipping. Shipowners and charterers may need to renegotiate contracts to account for FuelEU compliance, especially when it comes to fuel choices and the allocation of compliance-related costs. In some cases, technical managers may even bear financial liability for non-compliance, creating new layers of complexity in contract management.
What Can Shipping Companies Do to Prepare?
To navigate these challenges, shipping companies should take a proactive approach. Here are some key steps to get started:
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Submit Your FuelEU Monitoring Plan
By August 2024, submit a detailed monitoring plan outlining how you will track and report emissions. Ensure your verifier is accredited and be prepared for any potential changes in verifiers.
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Explore Alternative Fuels
Start planning now to transition to low-carbon fuels such as biofuels or RFNBOs. Investigate fuel supply contracts, ensuring they meet the necessary GHG intensity and sustainability certifications.
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Leverage Flexibility Mechanisms
Use mechanisms such as compliance surplus banking and pooling, which allow for fleet-wide compliance rather than vessel-specific compliance. -
Plan for Commercial Adjustments
Reassess your contracts with charterers and suppliers. Ensure that any costs related to FuelEU compliance are factored into the agreements, and negotiate liability in case of non-compliance. -
Partner with Compliance Experts
Companies like Shipergy offer a wealth of expertise and solutions tailored to meet FuelEU Maritime compliance. Shipergy not only provides biofuel options but also offers tools like its own GPT model specifically designed to explain FuelEU Maritime and assist with regulatory guidance. You can explore Shipergy’s solutions, including compliance support and biofuel supply, to ensure you're fully prepared for 2025 and beyond.
Conclusion
FuelEU Maritime is set to revolutionize the shipping industry, driving a shift toward decarbonization. Shipping companies need to act now to prepare for compliance, mitigate penalties, and remain competitive. Whether you need assistance in fuel sourcing or regulatory guidance, Shipergy stands ready to help you navigate the complexities of FuelEU Maritime. Don’t wait until the last minute—start preparing today for a greener tomorrow.
