FuelEU Maritime: How to prepare for compliance

Author： Hits：121 Date：2024-05-08 source：DNV

FuelEU Maritime sets requirements on the well-to-wake GHG intensity of energy used for ships trading in the EU/EEA from 1 January 2025. The first step is to prepare and submit a monitoring plan to an accredited verifier by 31 August 2024.

Summary of the FuelEU Maritime GHG intensity
requirements

From 1 January 2025, for ships trading in or to/from the EU/ EEA irrespective of flag, the annual average GHG intensity of energy used on board needs to be below a defined level. The GHG intensity is measured as GHG emissions per energy unit (gCO2e/MJ) and includes carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O).

In addition to emissions from energy use on board the ship, GHG emissions are calculated in a well-to-wake perspective, including emissions related to the extraction, cultivation, production and transport of fuel. The regulation includes provisions for crediting ships using wind-assisted propulsion.

The GHG intensity requirements are set as a percentage reduction relative to a 2020 reference value of 91.16 gCO2e/MJ. The percentage reduction requirement increases gradually every five years to 2050 – meaning, for example, that it stays at 2% from 2025 to end-2029:

Voyages, scope

The FuelEU Maritime GHG intensity requirements apply to 100% of energy used on voyages and port calls within the EU/ EEA, and 50% of energy used on voyages into or out of the EU/EEA. To avoid evasive behaviour, container ships stopping in transshipment ports outside the EU/EEA, but less than 300 nautical miles from an EU/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 transshipment port. 

The GHG intensity requirements apply to ships above 5,000 GT transporting cargo or passengers for commercial purposes. It does not apply to offshore ships. The scope could change as part of the scheduled review by the end of 2027.

FuelEU Maritime also sets requirements on the use of shore power for container and passenger ships from 2030. More details on this part of the regulation can be found in the References.

Compliance process

Responsible shipping company

The requirements apply to the shipping company, which is the shipowner or any other organization or person, such as the manager or the bareboat charterer, who has assumed responsibility for the operation of the ship, including duties and responsibilities imposed by the ISM Code.

As opposed to EU ETS, the responsible company under FuelEU Maritime must be the ISM company and cannot be retained by the registered owner unless the owner is also the ISM company. This implies that the responsible company for a ship may not be the same for EU ETS and FuelEU Maritime. Each responsible company will need to be registered with an administering state, which is the same as the Administering Authority for EU ETS compliance.

In the event of a change of company, the shipping company has the responsibility – on 31 December in any given year – for compliance for the whole calendar year. However, previous companies are required to report and verify energy use and emissions as soon as possible after the changeover.

Pooling of compliance

FuelEU Maritime includes the option to attain compliance across a fleet of ships, even if they belong to different companies. This means that each individual ship does not need to achieve the required GHG intensity but can rely on other ships to achieve a combined level of GHG intensity below the requirement.

Banking and borrowing of compliance surplus

If a ship has an average GHG intensity below the requirement, the surplus emission amount (compliance surplus) can be banked for use in the subsequent compliance period. Similarly, a ship can borrow advance compliance surplus from a subsequent period, limited to 2% and only for two consecutive periods, and with a 10% penalty on the borrowed compliance surplus for the subsequent period.

Penalties

Ships that have a higher GHG intensity than the requirement must pay a penalty corresponding to its compliance deficit, measured as the difference between the required and actual GHG intensity, multiplied by the energy use. The penalty is progressively increased if the ship has a compliance deficit for two or more consecutive reporting periods. The compliance deficit is calculated into energy based on the actual GHG intensity of the ship, applying a penalty of €2,400 per tonne VLFSO energy equivalent, or about €58.50 per GJ of non-compliant energy use. Hence, the penalties can be significant.

Reporting and verification

The energy use and emissions will be reported and verified through a scheme which is separate from the existing EU Monitoring, Reporting and Verification (MRV) system. However, elements from the MRV regulation can be reused for the purpose of the FuelEU Maritime regulation.

By 31 August 2024, the FuelEU Maritime Monitoring Plan needs to be submitted to a verifier, describing the method for monitoring and reporting of the data required under this regulation. This plan comes in addition to the current MRV Monitoring Plan, but part of this can be reused.

Vessels trading in the EU/EEA countries shall have the approved FuelEU Maritime Monitoring Plan on board before 1 January 2025.

What actions need to be taken by shipowners?

• - Submit a FuelEU Monitoring Plan to an accredited verifier. This plan should outline how you intend to monitor and report emissions for each ship in your fleet. This should be - -- completed by 31 August 2024.

• - Start reporting key data related to FuelEU Maritime from 1 January 2025. This data includes fuel consumption, CO2 emissions, and distance traveled.

• - Have individual ship’s FuelEU partial reports verified maximum 1 month after change of company.

• - Submit the individual ships’ FuelEU reports by 31 January 2026.

• - By 30 April 2026, have the compliance balance approved in FuelEU database.

• - By 30 June 2026, have the FuelEU Document of Compliance onboard. This is also the penalty payment deadline.