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The shipping industry is already at risk of significant fines, even before the FuelEU Maritime regulations take effect. It is particularly the lack of FuelEU clauses in charterparty agreements and pooling arrangements that causes costs to accumulate.
For vessels that are on time charter (TC) until next year, current contracts likely lack clauses to cover FuelEU regulations. As a result, there is no obligation to blend any biofuel for the first half of 2025, when the regulation is already in place, so the ship will accumulate a FuelEU compliance deficit.
Siglar Carbon estimate that, for a MR running a Med-Cont route from Sarroch to Rotterdam, this compliance deficit represents a hidden cost of approx. EUR 15,500 per voyage which, by July, would aggregate a deficit exposure in excess of approx. EUR 140,000 for the mentioned vessel. With middling-sized ship owners having around 30 vessels on their books, this quickly adds up to a staggering amount due to inactivity.
“This issue is flying under the radar,” said Siglar Carbon CEO Sigmund Kyvik. “Owners and charterers need to understand their current emissions and exposure to stay ahead of these costly decisions as it’s already adding significant cost that won’t be visible until next year.”
FuelEU pooling allows shipowners to balance GHG intensity targets across multiple vessels, but each ship can only join one pool per year. This highlights the need for specific FuelEU pooling clauses to decide who handles the compliance deficit or surplus and whether it is the head owner or the TC owner who can choose to pool the vessel’s compliance.
Either way, as the example above shows, understanding your ships’ FuelEU exposure is crucial, as is having accurate and neutral estimates of your counterparts’ compliance balance to determine beneficial pooling opportunities.
The FuelEU Maritime regulation, effective January 1, 2025, mandates that commercial vessels over 5,000 GT calling at EU ports comply with strict GHG intensity limits, includingCO2, methane, and nitrous oxide emissions. Ships must also use onshore power supply (OPS) or alternative zero-emission technologies at berth to reduce port air pollution.
The shipping industry is already at risk of significant fines, even before the FuelEU Maritime regulations take effect. It is particularly the lack of FuelEU clauses in charterparty agreements and pooling arrangements that causes costs to accumulate.
For vessels that are on time charter (TC) until next year, current contracts likely lack clauses to cover FuelEU regulations. As a result, there is no obligation to blend any biofuel for the first half of 2025, when the regulation is already in place, so the ship will accumulate a FuelEU compliance deficit.
Siglar Carbon estimate that, for a MR running a Med-Cont route from Sarroch to Rotterdam, this compliance deficit represents a hidden cost of approx. EUR 15,500 per voyage which, by July, would aggregate a deficit exposure in excess of approx. EUR 140,000 for the mentioned vessel. With middling-sized ship owners having around 30 vessels on their books, this quickly adds up to a staggering amount due to inactivity.
“This issue is flying under the radar,” said Siglar Carbon CEO Sigmund Kyvik. “Owners and charterers need to understand their current emissions and exposure to stay ahead of these costly decisions as it’s already adding significant cost that won’t be visible until next year.”
FuelEU pooling allows shipowners to balance GHG intensity targets across multiple vessels, but each ship can only join one pool per year. This highlights the need for specific FuelEU pooling clauses to decide who handles the compliance deficit or surplus and whether it is the head owner or the TC owner who can choose to pool the vessel’s compliance.
Either way, as the example above shows, understanding your ships’ FuelEU exposure is crucial, as is having accurate and neutral estimates of your counterparts’ compliance balance to determine beneficial pooling opportunities.
The FuelEU Maritime regulation, effective January 1, 2025, mandates that commercial vessels over 5,000 GT calling at EU ports comply with strict GHG intensity limits, includingCO2, methane, and nitrous oxide emissions. Ships must also use onshore power supply (OPS) or alternative zero-emission technologies at berth to reduce port air pollution.
