INTERVIEW: Industry Stakeholders Struggling to Understand Impact of EU-ETS, says MFA

Anthony Mollet, Executive Officer at the Marine Fuels Alliance. Image Credit: MFA

Anthony Mollet, Executive Officer at the Marine Fuels Alliance (MFA), says many industry stakeholders are struggling to understand the implications of the upcoming EU-ETS regulation for shipping. This is despite it being only a matter of weeks before the new rules come into force.

Biofuels, sanctions, and training are some of the other key areas where the MFA has been helping its membership this year, Mollet told Ship & Bunker in a recent interview where we discussed some of the MFA's key areas of focus over the last year.

EU-ETS

The new EU-ETS rules come into force from January 1, 2024, and will require ships trading in Europe to pay for the emissions that their ships generate.

"I've talked to a lot of people about EU-ETS who simply don't understand it and they have left it very late to start learning," said Mollet.

"Only last week we had an email from a company that heard about the MFA and they said, 'we're a charterer in the Middle East, our ships will be going to Europe, what's this EUA thing and what do we need to do?'"

Mollet says that even many of those that do understand EU-ETS also need help.

"MFA has talked to a number of leading shipowners who worry they simply will not be ready," he said.

"We were recently talking to a leading shipowner who has put tremendous effort and plans in place for EU-ETS, but are now worried that their registry account won't be ready though no fault of their own, because the country that is setting the registry account up will not have it ready."

One goal of the MFA is to connect its members offering services - so-called 'partners' - to those that need them.

"We have one partner, Grey Epoch, who is an environmental market trader. They are very proactive with us at the moment, and are willing to take those phone calls from charterers looking for help, or talk to members looking for advice," said Mollet.

"So that's been a good example of how the MFA is working to help its membership."

Biofuels

With biofuels offering one of the few viable routes for ships to reduce their net emissions today, they have naturally been receiving a lot of attention from ship owners and operators this year. Reports from those trialling biofuel have been emerging on an almost daily basis.

"Everyone has asked us about biofuels," said Mollet.

"But I would say everyone's asking about them knowing that they're probably not going to do anything about getting involved with burning them just yet."

"From the buyers side we've had people asking 'How does it work? What would I order?', but also a lot of questions about specs:  'Where can I get the specs of B30 or B24' and so on. So people are expecting a spec sheet that you get with VLSFO or HSFO, and we've had to explain to them that in a way you kind of can't right now.

"Equally, we've had physical suppliers come to us say, 'We're ready to start selling these biofuels, what have I got to do for my barge, my trucks, my hoses, storage, etc?' That's a big question that I've been answering a lot on."

Regular readers of Ship & Bunker will know there is a long list of companies reporting successful trials of biofuel bunkers, with very few signs of issues.

However, Mollet says that there are still concerns in the industry over the use of the alternative fuel.

"I was recently representing our members at the Marine Fuel 360 conference in Singapore, and a key take away from that week was there were admissions by shipping companies that they are not necessarily changing yet to new fuels because of their concerns. In particular are the companies that have tramping vessels that they don't know where they're going to go and there is speculation about the stability and the lifespan of certain fuels when you're sailing around the world.

"A lot of the biofuels to date have been sold in short, small parcels, 20 to 30 tonnes. This is fine if you are going back and forth between Rotterdam and Immingham, Scotland and Denmark, short run vessels and ferries. But deep sea, more than 400 tonnes, there is still some research that needs to be done."

Sanctions

With the increasing complexity of compliance and sanction requirements, Mollet says it is little surprise that this is once again an area where many of its supplier members ask for help.

"A couple of times this year there's been renewed and updated sanctions, so we've got two or three meetings online where one of our legal or sanctions experts have given a run through to explain what the sanction changes mean. We thank Partners such as Hafnia Law Firm for their time and guidance to members, including a fantastic course they ran in Copenhagen," he said.

"We have just done an MFA meeting on sanctions for our supply members to not only give them an overview but talk to them about their experiences with the different vessel tracking services. The main message we've been giving them is that the MFA is strongly advising all suppliers and traders to please go and talk to your risk underwriters to make sure you're aligned.

"You could be subscribed to any of the vessel tracking companies and have red or amber flags on vessels, but that is just guidance. If the tracking service OKs a vessel and the bank won't touch it, you are going to have a problem.

"So sit with your bank to make sure you're aligned. Understand that they will not tell you what to do. They will not write the policy for you. But they will look at your policy and agree or disagree with it. From there you can come to a common agreement."

Training

While training comes in many forms, Mollet says the upcoming changes to the marine fuels landscape means the demand for all types of training is particularly high.

"You've got experienced staff who right now are going through the biggest change in generations. They're learning about EU-ETS, they're learning about biofuels," he said.

"Then you have the new ones coming in that need to learn the basics; what is VLSFO, what is MGO."

Mollet says MFA is not only connecting members to provide and receive training, but is helping some members develop their own in-house training modules.

"Even if it is just really basic training, there is interest in making something that ensures every member of staff can at least tick a box to say they've learnt the basics on sanctions updates or biofuels etc," he added.

"And when developed for one member, MFA can deliver that to other companies."

With EU-ETS and biofuels two of the biggest topics of 2023, Mollet says the MFA is also advising every company to next year focus on those topics for training.

"Next year all companies should definitely be assigning a member of staff to learn everything they can about EU-ETS and biofuels. I think you need an in-house expert," he said.

"That could be the newest entrant, the person invoicing, or  whoever. It gives someone that sense of responsibility. A lot of companies have a credit and compliance manager and have for a long time. Your customers, your bank are increasingly going to demand you know about these new things and how they will impact your business, so make sure you have an expert that does."

Membership

With the MFA having celebrated its official 1-year anniversary in February of this year, Mollet says the now not-so-new bunker industry organisation has also spent the year continuing to grow its membership.

"People are getting it, they understand what we're trying to do," Mollet told Ship & Bunker.

"This year we have had around 3 new members per month joining, so we now have around 85 members across 33 countries. And an interesting part of that is they are coming from Nigeria, to Vancouver, to Malaysia. There's no hotspots, no one place where there's more members than others. It's a very even global distribution."

The new additions are a mix of what MFA calls Partners - companies with services to offer the membership - and bunker suppliers.

"We're also into membership renewals now, and it's nice to see the suppliers that joined last year are renewing," Mollet added.

2024

For the year ahead, in addition to the ever-present task of growing the MFA membership, Mollet says he will be looking to further the engagement of its membership.

"We've got executive management, who help with the meetings and come to me with key industry information in their specialized areas of credit, digitization, and so on. What we are looking for next year is to really build on the active engagement of the executive management across what are our key focus areas," he said.

"And I think we need to increase our delivery of tangible resources, and put more resources on the website.

"I would also like to get our engaged experts more visibly and see them proactively teaching people. I think that would help develop the membership."

Mollet stresses that engaging with membership is not just about online meetings, but making sure there is as much in-person time as possible.

"It is great to go to events, not only to see members and prospective members but to share the views and questions of our members that cannot attend.

"MFA has also been actively going into suppliers' offices to sit with them. It makes a huge difference in understanding a supplier's needs when you can see their port, see their barge, and actually talk about their local issues.

"When we do that, it not only helps my education but also then when you hear something said three or four times in the same country think oh, okay, that's a problem here.

"So getting engaged and visiting suppliers, actually sitting with them and going through their issues, is something we aim to do even more of in the year ahead."