INSIGHT: How to Cope With FuelEU Maritime

Glander International Bunkering discusses how the shipping industry is approaching compliance with the FuelEU Maritime regulation. Image Credit: Glander International Bunkering

The start of 2025 saw the introduction of the FuelEU Maritime regulation in Europe that will mandate the increasing use of low-carbon fuels.

Effective January 1, 2025, a new requirement applies to the fuel burned onboard vessels.

The regulation mandates a steadily falling GHG intensity of energy used in shipping touching European ports, with a 2% reduction in emissions per unit of energy this year, rising to 6% in 2030 and then up to 80% by 2050.

The most common response to the regulation will be a switch to using biofuel bunker blends some of the time, where these alternatives are available at attractive prices. Any companies already using ships capable of using other low-carbon fuels will be at an advantage.

However, not every ship will need to shift to alternative fuels for their companies to comply. Careful management of emissions across a fleet can lead companies to meet the new requirements while optimizing costs.

Approaches to Managing Emissions

The first thing to note is that compliance with FuelEU can be achieved across a fleet of ships rather than each vessel needing to meet the intensity targets.

These fleets can cover ships owned by different companies, meaning shipping firms can work together to create pools across which compliance can be achieved; significant overperformance by one ship in the fleet using 100% biofuels or other new fuels can be spread across the group.

This introduces the possibility of companies cooperating to ensure collective compliance, with one group of verified ships more suited to immediate decarbonization being able to sell its over-compliance to bring up the average of a larger fleet under the same verifying body.

Overcompliance in one year can also be banked so that the excess cut in carbon intensity can then be used in the next compliance period.

Excess compliance can also be borrowed from future periods, with some restrictions.

Both banking and borrowing are ship-specific and cannot be used for other vessels. Storing compliance surplus in this way for future periods may help ships operate with lower emissions in the short term, but could create concerns about the future availability of low-carbon fuels or the ability to comply for other reasons down the line.

Borrowing compliance surplus in this way would allow ships to postpone compliance and take that into account when planning for the following year.

Ships' monitoring plans under the EU MRV regulation can, to some extent, be reused for their FuelEU plans. The FuelEU monitoring plan needed to be in place by August 1, 2024, and checked by an independent verifier.

Penalties

FuelEU Maritime comes with a significant penalty for non-compliance. Therefore, it is advised that companies take a detailed look at the potential costs.

A penalty of €2,400 per mt of VLSFO energy equivalent ($2530/mt VLSFOe) will be applied to compliance deficits from when the regulation comes into force.

The reputational risk of being named as being non-compliant should also be a consideration, as well as potential bans from EU ports for repeated periods of non-compliance.

How We Can Help

At Glander International Bunkering, we have a wide range of services to help shipping companies with the increasingly complex requirements of FuelEU and other regulations.

Our team can offer guidance on the best alternative fuel options to ensure compliance, evaluating fuel suppliers and biofuel blend components.

We can provide the necessary documentation, verify these documents, and calculate emissions with verifiers. We will work closely with engine manufacturers to offer technical advice upon the buyer's request.

Our FuelEU Maritime calculator can help our customers estimate the required biofuel volumes and blends for regulatory requirements, and we can leverage our strategic supplier relationships to optimize blend components in accordance with the RED II standards.

For help with this regulation or any other topic affecting your bunker procurement, get in touch here.