The FuelEU Maritime regulation, which aims to reduce greenhouse gas emissions from ships, will come into effect on January 1, 2025. Shipping companies will need to comply with new reporting requirements to track and reduce their emissions, according to Britannia P&I Group.
Primary Objective
The principal objective of the regulation is to reduce greenhouse gas emissions from the shipping industry. There are three main ways it does this:
- It reduces the permitted Greenhouse Gas² (GHG) intensity of energy used
- It will make mandatory use of onshore power supply (OPS) for container ships and passenger ships calling at many ports within the EU/EEA
- It encourages the uptake and development of renewable fuels of non-biological origin (RFNBO).
The regulation will introduce financial penalties for non-compliant ships and ultimately expulsing vessels that refuse to comply.
About Energy Use
- For calculating applicable energy usage, and subsequent GHG intensity. The following must be reported: All energy consumed within an EU/EEA port and during any journey between EU/EEA ports
- 50% of the energy consumed during any journey between EU/EEA ports if one of the ports is located in an ‘outermost region³’
- 50% of the energy consumed between voyages to/from an EU/EEA port and a third country.
The company responsible for complying with the regulation is the ship’s ISM Code Document of Compliance holder. This company must record all the data specified in the ship’s approved monitoring plan5 for each ‘reporting period’. The monitoring plan will be approved by accredited verifiers (often a ship’s classification society). The monitoring plan should have been submitted by 31 August 2024 for ships that meet the above criteria. For ships that first call at an EU/EEA port after 31 August 2024, a monitoring plan must be submitted to their verifier for approval within two months.
Each reporting period for a given year runs from 1 January until 31 December. All data collected should be combined in a ship-specific report and submitted to the accredited verifier by 31 January of the following year. The year following a reporting period is known as the ‘verification period’ for the previous year.
Looking at Compliance Balance
If the compliance balance is in surplus, the company can ‘bank’ this surplus for use in the following year’s reporting period, effectively reducing the energy intensity saving required. Alternatively, this surplus can be ‘pooled’ with other ships.
If the compliance balance is in deficit, the company can ‘borrow’ some allowance from the next reporting year (with an interest penalty), effectively increasing the energy intensity saving required for the following year. Note that borrowing cannot be used two years in a row. Alternatively, the deficit can be offset by using the ‘pooled’ surplus from other ships.
Pooling allows the surplus of a ship to be used to remove a compliance balance deficit for one or more ships. There are various permutations allowed, including the pooling with ships controlled by another company. There are commercial implications when pooling compliance, particularly between companies. Legal advice should be sought when doing so.
If none of the above compliance methods are used to remove a compliance deficit, then a financial penalty must be paid. The financial penalty increases each year and compliance is not achieved.
On Shore Power Supply
Container ships and passenger ships must connect to an OPS from 1 January 2030 when calling at certain ports, within the EU/EEA.
This requirement for container ships and passenger ships to connect to OPS will be further expanded from 1 January 2035 to all other ports where an OPS is available.
Furthermore, any port may make the use of OPS mandatory between 1 January 2030 until 31 December 2034, providing a notice period of one year is advised.
There are some exceptions to the above, such as being moored for less than two hours, or where an alternative zero-emission technology is used for all electrical power demand.
Did you Subscribe to our daily newsletter?
It’s Free Click here to Subscribe!
Source: Britannia P&I Group
