EU’s FuelEU Maritime Regulation Countdown

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  • The EU’s FuelEU Maritime regulation, effective January 2025, will enforce strict emission standards, impacting multiple stakeholders in the shipping industry.
  • To avoid penalties, shipowners, charterers, and managers must address FuelEU compliance within contracts.
  • Effective data exchange and collaboration will be vital for meeting FuelEU requirements.

Starting January 2025, the EU’s FuelEU Maritime regulation will enforce emission reductions as part of the Fit to 55 package. It aims at net-zero goals and will set stringent targets and penalties to decarbonize maritime operations, reports Baltic Exchange.

Industry Stakeholders’ Responsibilities

Norton Rose Fulbright notes that FuelEU compliance requires attention from shipowners, charterers, and managers.

Compliance is complex, and all parties must prepare for new obligations.

Compliance Responsibility

The regulation holds the Document of Compliance (DOC) holder solely responsible for compliance, placing considerable pressure on ship managers, even if they lack control over operational emissions.

Parties must review contracts to clarify FuelEU compliance responsibilities, covering costs, emissions credits allocation, and penalties. Preparation is critical as the January 2025 deadline nears.

Monitoring and Reporting

Companies must submit a FuelEU monitoring plan by August 2024. Data recording is required after January 2025, and compliance verification is due by January 2026. In June 2026, a DOC or fines will be issued based on compliance.

Operational decisions under time charters can impact emissions, raising questions about the costs, value of compliance surpluses, and how often compliance will be assessed—annually or more frequently.

Pooling Compliance Resources

FuelEU allows compliance pooling between ships, but contractual clarity on sharing surplus or deficit emissions is essential.

Ship efficiency variations will require equitable benefit distribution among owners.

Ownership and DOC Challenges

Changes in ownership or DOC holders add complexity.

Parties must establish contractual agreements to address ownership shifts and DOC holder responsibilities during sales or management changes.

Indemnities and Guarantees for DOC Holders

The regulation does not specify cross-responsibility between DOC holders. Contracts will need indemnities and guarantees to protect against third-party deficits or penalties from prior compliance issues.

Norton Rose Fulbright advises proactive compliance measures, including contract reviews, monitoring plan development, and emission reduction strategies. Regular updates and collaboration will be key for adapting to FuelEU requirements.

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Source: Baltic Exchange