Understanding The New Dynamics Of EU FuelEU Maritime Compliance

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The EU’s FuelEU Maritime (FUEM) regulation, coming into effect in early 2025, mandates significant reductions in the greenhouse gas (GHG) intensity of energy used onboard vessels. The regulation aims for an 80% reduction in GHG intensity by 2050 compared to 2020 levels. Compliance and associated penalties are key aspects of this regulation, necessitating updates to commercial contracts for clarity on responsibilities and financial implications.

Roles and Responsibilities

DNV, a leading classification society, highlights the importance of identifying the responsible parties for FUEM compliance. Unlike the EU Emissions Trading System (EU ETS), the ISM company (complying with the International Safety Management code) is accountable for adhering to FUEM. This distinction means that the responsible company for EU ETS may not be the same for FUEM, necessitating precise updates in commercial contracts to reflect these roles.

Contractual Updates and Guidance

Given the complexities of FUEM compliance, DNV recommends that shipowners and operators revise their commercial contracts to include specific terms covering FUEM responsibilities. For technical managers, securing updated ship management contracts before January 2025 is crucial. Although FUEM lacks direct guidance for commercial contracts between owners and charterers, DNV advises charterers to prepare for increased use of compliant fuels.

Financial Provisions and Compliance Costs

DNV anticipates that future term charter agreements will incorporate specific clauses addressing FUEM requirements, including provisions for financial settlements and compliant fuel usage throughout the contract duration. For voyage charter and affreightment contracts, FUEM compliance costs are expected to be integrated into charter rates and tariffs. These measures ensure both parties are financially accountable for meeting FUEM regulations, promoting a collaborative approach to achieving GHG intensity targets.

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Source: ENGINE