FuelEU Maritime

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FuelEU Maritime

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FuelEU Maritime

EU Agrees on FuelEU Maritime Initiative

European Parliament (EP), European Commission (EC) and European Council reached an agreement on 23 March 2023 on another key instrument of the Fit for 55 legislative package, which aims to reduce European Union’s (EU) net greenhouse gas (GHG) emissions by at least 55 percent by 2030 compared to 1990 levels and pave the way for climate neutrality in 2050.

What are the main requirements on FuelEU Maritime Regulation?

FuelEU Maritime Regulation is a technical measure that aims to decarbonize maritime transport in the EU. It has three key requirements:

  1. Reduce the GHG intensity of the energy used on board.
  2. Use of onshore power supply (OPS) in main European ports.
  3. Incentivize the uptake of renewable and sustainable fuels.

Reduction of Energy’s GHG Intensity Used On Board 

Beginning from 2025, ships operating in the EU, or European Economic Area (EEA) must cover their energy needs by fuels of GHG intensity (measured in gCO₂ₑ/MJ) below a threshold value. The GHG intensity will be measured on a Well-to-Wake (WtW) basis, where Well-to-Tank (WtT) phase covers the generated emissions from the extraction, cultivation, production and transportation of the fuel whereas Tank-to-Wake (TtW) covers the emissions generated during the combustion of the fuel.

The GHG intensity threshold will be subject to a five-year percentage reduction with respect to a reference value, which is based on the average energy used onboard in 2020, reported in the EU Monitoring Reporting and Verification (MRV) data of that year, calculated equal to 91.16 gCO₂ₑ/MJ.

 

Year

2020

2025

2030 

2035

2040

2045

2050 

Reduction

-

-2%

-6% 

-14.5%

-31%

-62%

-80% 

GHG intensity [gCO2e/MJ]

91.16

89.34

85.69 

77.94

62.90

34.64

18.23 

 

Use of Onshore Power Supply (OPS) in Main European Ports

From 1 January 2030, containerships and passenger ships above 5,000 gross tonnage (gt), moored at the quayside in a port of call at a TEN-T maritime port shall cover its electrical power demand at berth by OPS. From 1 January 2035, the obligation to use OPS at berth is extended to non-TEN-T ports, where the quay is equipped with OPS. The regulation offers specific conditions where the use of OPS is non-mandatory such as:

  • Vessel is moored at the quayside for less than two hours.

  • That use zero-emission technologies for all their electrical power demand at berth. 

  • Incompatibility between the onboard and onshore power equipment.

Trans-European Transport Network (TEN-T) is a key instrument for the development of efficient and high-quality transport infrastructure across EU. Currently, TEN-T consists of two layers, the TEN-T core network which links major cities and nodes and shall be completed by 2030, and the comprehensive network that connects all regions of the EU to the core network and shall be completed by 2050. The revision of TEN-T will include an additional layer — the extended core network — which shall be completed by 2040. 

Use of Renewable Fuels of Non-Biological Origin (RFNBOs)

The EU wants to incentivize the uptake of RFNBOs. To that end, the use of RFNBOs from 1 January 2025 until 31 December 2033 will be rewarded in a sense that, the GHG intensity of RFNBOs will be halved for the calculation of the actual GHG intensity of the energy used on board. In addition, if the share of RFNBOs for the reporting period of 2031 is less than 1 percent of the energy mix, a sub-target of 2 percent of the energy used on board by a ship from 1 January 2034 shall apply.

Voyages 

The regulation applies to:

  • The entirety of the energy used on voyages from a port of call under the jurisdiction of a member State to a port of call under the jurisdiction of a member State.

  • The energy used at berth within a port of call under the jurisdiction of a member State.

  • Half of the energy used on voyages departing from or arriving at a port of call under the jurisdiction of a member State, where the last or the next port of call is under the jurisdiction of a third country. 

Port of call is a port where ships stop to load or unload cargo or to embark or disembark passengers. Stops for the sole purpose of refueling, obtaining supplies, relieving the crew, going into dry-dock or making repairs to the ship, its equipment, or both, stops in port because the ship is in need of assistance or in distress, ship-to-ship (STS) transfers carried out outside ports, stops for the sole purpose of taking shelter from adverse weather or rendered necessary by search and rescue activities, and stops of containerships in a neighboring container transshipment port are excluded. 

Container transshipment ports: The commission shall, by 31 December 2025, by means of implementing acts establish a list of container transshipment ports and update that list by 31 December every two years thereafter. That list shall contain ports where the share of containers, measured in twenty-foot equivalent unit, exceeds 65 percent of the total container traffic of that port during the most recent twelve-month period for which relevant data are available and where that port is located outside the Union but less than 300 nautical miles from a port under the jurisdiction of a member State. 

Greenhouse Gases 

The FuelEU Maritime Regulation covers GHG emissions from WtW. For the TtW, regulation considers not only carbon dioxide (CO₂) emissions but also methane and nitrous oxides. Methane and nitrous oxides are subsequently converted into CO₂ equivalents, multiplied with Global Warming Potential of 100 years (GWP100) which is equal to 28 for methane and 265 for nitrous oxides respectively, as defined in Regulation (EU) 2020/1044.

 

Penalties

Ships with a higher GHG intensity than the threshold must pay a remedial penalty proportional to their compliance deficit. The compliance deficit is the difference between the reference GHG intensity and the actual one, multiplied with the energy consumption, which is calculated by multiplying the mass of the fuel along with the lower calorific value (LCV) and the electricity delivered at ship. 

 

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Ship Types

FuelEU Maritime applies to all ships above 5,000 gt that serve the purpose of transporting passengers or cargo for commercial purposes.

 

Derogations

Ice-Classed vessels

Small Islands

Outermost regions 

Transnational voyage

Until 31 December 2034, vessels having IA or IA Super ice-class can deduct the additional energy due to the technical characteristics of the ship. In addition, vessels having IC, IB, IA or IA Super ice-class can deduct the additional energy due to sailing in ice conditions.

Member States until 31 December 2029, may exclude specific routes and ports concerning the energy used on voyages performed by passenger ships other than cruise passenger ships between a port of call under the jurisdiction of the same member State and a port of call under the jurisdiction of the same member State located in an island with less than 200,000 permanent residents and the energy used during their stay within a port of call of the corresponding island.

Member States until 31 December 2029, may exclude the energy used on voyages between a port of call located in an outermost region and another port of call located in an outermost region, along with the energy used at berth within the ports of call of the corresponding outermost regions. 

Member States with no land border with another member State may except passenger ships performing transnational voyages under the public service obligations to the port of calls of other member States, until 31 December 2029.

 

[EUR FuelEU Penalty= (Compliance Balance / GHGIEactual * 41000) * 2400]

Subsequently, the compliance balance deficit is converted to energy, being divided with the actual GHG intensity of the vessel. The non-compliant energy as calculated, is finally multiplied with a penalty of EUR 2,400 per tonne very low sulfur fuel oil (VLSFO) equivalent energy which is equal to around EUR 0.058 per MJ of non-compliant energy.  

Ships that do not meet the subtarget for RFNBOs shall pay a remedial penalty equivalent to the compliance balance of RFNBOs which is calculated as the difference between the 2 percent of the total energy used on board minus the total energy that comes from RFNBOs, multiplied with the price difference between RFNBOs and fossil fuel compatible per tonne VLSFO. Penalties will be increased for ships that have compliance deficits for either GHG intensity or RFNBOs target for two or more consecutive years.

Noncompliance with OPS requirements imposes a remedial penalty equivalent to EUR 1.5 multiplied with the established total electrical power demand at berth and by the total hours of noncompliance at berth.

 

Banking/Borrowing/Pooling of compliance 

Banking of Compliance

In case that a ship has a compliance surplus either on the GHG intensity or the subtarget for RFNBOs, the company may bank that compliance balance and use it for the same ship in the following reporting period. In addition, in case the vessel has a compliance deficit in a reporting period, the company may borrow an advance compliance surplus of the corresponding amount from the next reporting period. In the next reporting period, the borrowed compliance surplus must be multiplied by 1.1 and be subtracted from the same ship’s balance. Borrowing of advance compliance is not possible if:

  • The compliance balance exceeds more than 2 percent of the threshold GHG intensity multiplied with the energy consumption of the ship.

  • Used for two consecutive reporting periods.

 

Pooling of Compliance

The compliance balance for GHG intensity and subtarget of RFNBOs can be pooled. Pools can consist of vessels of the same or different company, but the allocation of the compliance shall be verified by the same entity. Two different pools can be used for compliance with the GHG intensity target and RFNBOs subtarget. A pool is only possible if:

  • Total pooled compliance is positive.

  • Ships that had a compliance deficit do not have a higher compliance deficit after the allocation of the pool.

  • Ships that had a compliance surplus do not have a compliance deficit after the allocation of the pool. 

 

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Monitoring, Reporting and Compliance

Monitoring and Reporting

The entity responsible for monitoring, reporting and payment of remedial penalties remains the shipping company as defined in Article 3, point (w) of Directive 2003/87/EC. Due to the fact that the purchase of the fuel and the operation of the ship — determining the cargo carried, the route and the speed of the ship — might be assumed by a different entity than the shipping company, the regulation foresees the liability of the latter to be reimbursed for the payment of the remedial penalties.

Shipping company means the shipowner or any other organization or person, such as the manager or the bareboat charterer, that has assumed the responsibility for the operation of the ship from the shipowner and that, on assuming such responsibility, has agreed to take over all the duties and responsibilities imposed by the International Management Code for the Safe Operation of Ships and for Pollution Prevention, set out in Annex I to Regulation (EC) No 336/2006 of the European Parliament and of the Council. 

 

GHG Intensity of the Fuels

Annex II of FuelEU Maritime Regulation contains default emission factors for fossil fuels, biofuels and RFNBOs. For fossil fuels, the WtT emission factors shall be the default values contained in the relevant Annex. For the TtW phase, companies can either use the default values for methane and nitrous oxides or actual values certified by means of laboratory testing, whereas for CO₂ only the default values.

For biofuels and RFNBOs, FuelEU Regulation refers to RED II Directive. Biofuels and RFNBOs shall meet the sustainability and GHG savings criteria contained in Article 29 of RED II. Biofuels that do not comply with the sustainability and GHG saving criteria or that are produced from food and feed crops, are considered to have the same emission factors as the least favorable fossil fuel pathway for this type of fuel. Sustainable biofuels and RFNBOs can either use the default values as provided in Annex II and RED II Directive or actual values certified under a scheme that is recognized by the commission.

What are the rules that the FuelEU Maritime Regulation imposes?

The FuelEU Maritime Regulation imposes the following three rules:

  • From 2025, the GHG intensity of the energy used on board by a ship arriving at, staying within or departing from ports under the jurisdiction of a Member State to gradually decrease over time, by 2% in 2025 to as much as 80% by 2050;
  • From 2030, an obligation for passenger ships and containerships to use on-shore power supply (OPS) for all electricity needs while moored at the quayside in major EU ports (Ten-T ports);
  • The 2% of the energy used on board by a ship from 1 January 2034, to be covered from Renewable Fuels of non-Biological Origin (RFNBOs), only if the share of RFNBOs in the energy mix for the reporting period 2031 is less than 1%

 

Does the FuelEU Maritime Regulation apply to the entirety of the maritime transport in the EU?

The FuelEU Maritime Regulation applies to all ships above 5,000 GT that serve the purpose of transporting passengers or cargo for commercial purposes, regardless of their flag, in respect of:

  • The energy used during their stay within a port of call under the jurisdiction of a Member State;
  • The entirety of energy used on voyages from a port of call under the jurisdiction of a Member State to a port of call under the jurisdiction of a Member State;
  • Half of the energy used on voyages arriving at or departing from a port of call under the jurisdiction of a Member State, where the previous or the next port of call is under the jurisdiction of a third country.
  • Half of the energy used on voyages arriving at or departing from a port of call located in an outermost region under the jurisdiction of a Member State.

What is the definition of “port of call”?

“Port of call” means a port where ships stop to load or unload cargo or to embark or disembark passengers. Noting this, what is not considered as port of call is:

  • Stops for the sole purpose of refueling, obtaining supplies, relieving the crew, going into dry-dock or making repairs to the ship, its equipment or both;
  • Stops in port because the ship is in need of assistance or in distress;
  • Ship-to-Ship (STS) transfers carried out outside ports;
  • Stops for the sole purpose of taking shelter from adverse weather or rendered necessary by search and rescue activities;
  • Stops of containerships in a neighboring container transhipment port. By means of Implementing Acts, the European Commission shall establish a list of container transhipment ports. This list shall by updated by 31 December every two years thereafter. The list shall contain neighboring container transhipment ports, where the share of containers, measured in 20 FEU, exceeds 65% of the total container traffic of that port during the most recent 12-month period for which relevant data are available and where that port is located outside the Union but less than 300 nautical miles from a port under the jurisdiction of a Member State. As of 1st January 2024, the list has already been published with the Implementing Regulation (EU) 2023/2297, for the purpose of the EU ETS Directive, and contains:
  • East Port Said, Egypt;
  • Tanger Med, Morocco.

 

What are the derogations with respect to the GHG intensity of the energy used on board?

  • Until 31 December 2029, Member States may exclude specific routes and ports in respect of the energy used on voyages performed by passenger ships other than cruise passenger ships between a port of call under the jurisdiction of a Member State and a port of call under the jurisdiction of the same Member State, located in an island with less than 200,00 permanent residents and the energy used during their stay within a port of call of the corresponding island. The European Commission has already published the list of the islands the derogation applies to, with the Implementing Decision (EU) 2023/2895.
  • Until 31 December 2029, Member States may exclude the energy used on voyages between a port of call located in an outermost region and another port of call located in an outermost region, along with the energy used at berth within the ports of call of the corresponding outermost regions.
  • Until 31 December 2029, Member States that do not share a land border with any other Member State may exclude the energy used on voyages performed by passenger ships performing transnational voyages under the public service obligations to the port of calls of other Member States. These Member States are Greece and Cyprus, as per the Implementing Decision (EU) 2023/2895 and concerns the ports of Piraeus (Greece), Larnaca (Cyprus) and Limassol (Cyprus).

 

ABS Solutions

The ABS sustainability team can assist you in preparing your fleet for FuelEU Maritime, by providing you with the following solutions:

 

  • FuelEU annual cost estimation
  • FuelEU biofuel assessment
  • LNG, methanol, ammonia EU ETS and FuelEU assessment
  • Energy Efficiency Technology (EET) retrofitting guidance
  • Vessel specific investigation for EU ETS and FuelEU costs (Effects of reducing operating speeds and/or incorporating additional EETs