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The FuelEU Maritime kicks in January 1st, adding a new layer of complexity for ship owners and operators. What does it mean to your business and how can you adapt commercially?
FuelEU Maritime (FEUM) is far from simple, so I will try to break it down to its core parts. First, FEUM introduces practical challenges.
You have already submitted the FEUM monitoring plans for all your vessels. That was easy – basically a copy of the EU MRV monitoring plans, and quite generic. The hard part now starts by living up to the commitments made in the submitted plan:
Second, there are the legal obligations and rights put on owners.
Basically mirrors the EU ETS, but focus on energy (and emissions) from all voyages that start, end or both with a port call loading or discharging in EU/EEA ports.
The coming five years each ship needs to deliver a GHG intensity 2% better than for the reference year 2020. These “allowed” GHG emissions are the threshold multiplied with the energy consumed by the vessel. If the vessel’s actuals exceed the “allowed”, there is compliance deficit and penalty. FEUM peg the euro 2400 penalty to an VLSFO mt equivalent. The equivalent represents the vessels actual energy use above the threshold, given the vessels actual fuel mix and GHG intensity.
Now, on to the commercial side. How can you evaluate your options to comply with FuelEU Maritime and optimise your chartering strategy? Let’s break this down into 5 actionable steps:
Ensure accurate data collection and proper documentation to fully benefit from running your ships on bio blends or gas mode. Without valid reporting, you risk higher costs without gaining the compliance credits you deserve.
As for anything else in commercial shipping, charterers and owners are free to agree whatever they can agree upon, including FuelEU responsibilities. FEUM obligations is formally a matter between owners and DOC holders, but contracts must reflect the commercial realities:
Stay on top of compliance balances for each ship and across your fleet on a continuous basis. Without proper system, it’s very difficult to optimise as 2025 progresses. Say you have a deficit building, what is your optimal strategy? Are you better off:
Let’s say you have a surplus building, are you better off:
The compliance surpluses aren’t a one-size-fits-all commodity. The value depends on your ships GHG intensity of energy used, penalty cost, and the availability and ability to run on alternatives like bio fuels. Understand your ship and fleet economics to avoid overpaying or missing out on good opportunities.
Running on bio blends or alternative fuels can deliver significant compliance benefits but comes at a cost. Make tradeoffs between EUA costs, FuelEU compliance and bunker economics part of every fixture.
If your ship has dual-fuel LNG propulsion, you might be in for a treat as running in gas mode would generate a FEUM a compliance surplus that can be sold. However, do not expect to cash in a full reward of € 2400 per VLSFO equivalent.
Stay tuned for a deep dive into the numbers and economics of the maritime FuelEU!
The FuelEU Maritime kicks in January 1st, adding a new layer of complexity for ship owners and operators. What does it mean to your business and how can you adapt commercially?
FuelEU Maritime (FEUM) is far from simple, so I will try to break it down to its core parts. First, FEUM introduces practical challenges.
You have already submitted the FEUM monitoring plans for all your vessels. That was easy – basically a copy of the EU MRV monitoring plans, and quite generic. The hard part now starts by living up to the commitments made in the submitted plan:
Second, there are the legal obligations and rights put on owners.
Basically mirrors the EU ETS, but focus on energy (and emissions) from all voyages that start, end or both with a port call loading or discharging in EU/EEA ports.
The coming five years each ship needs to deliver a GHG intensity 2% better than for the reference year 2020. These “allowed” GHG emissions are the threshold multiplied with the energy consumed by the vessel. If the vessel’s actuals exceed the “allowed”, there is compliance deficit and penalty. FEUM peg the euro 2400 penalty to an VLSFO mt equivalent. The equivalent represents the vessels actual energy use above the threshold, given the vessels actual fuel mix and GHG intensity.
Now, on to the commercial side. How can you evaluate your options to comply with FuelEU Maritime and optimise your chartering strategy? Let’s break this down into 5 actionable steps:
Ensure accurate data collection and proper documentation to fully benefit from running your ships on bio blends or gas mode. Without valid reporting, you risk higher costs without gaining the compliance credits you deserve.
As for anything else in commercial shipping, charterers and owners are free to agree whatever they can agree upon, including FuelEU responsibilities. FEUM obligations is formally a matter between owners and DOC holders, but contracts must reflect the commercial realities:
Stay on top of compliance balances for each ship and across your fleet on a continuous basis. Without proper system, it’s very difficult to optimise as 2025 progresses. Say you have a deficit building, what is your optimal strategy? Are you better off:
Let’s say you have a surplus building, are you better off:
The compliance surpluses aren’t a one-size-fits-all commodity. The value depends on your ships GHG intensity of energy used, penalty cost, and the availability and ability to run on alternatives like bio fuels. Understand your ship and fleet economics to avoid overpaying or missing out on good opportunities.
Running on bio blends or alternative fuels can deliver significant compliance benefits but comes at a cost. Make tradeoffs between EUA costs, FuelEU compliance and bunker economics part of every fixture.
If your ship has dual-fuel LNG propulsion, you might be in for a treat as running in gas mode would generate a FEUM a compliance surplus that can be sold. However, do not expect to cash in a full reward of € 2400 per VLSFO equivalent.
Stay tuned for a deep dive into the numbers and economics of the maritime FuelEU!
