More EU ‘greener shipping’ regulations loom, with ‘significant’ penalties

Source: The Loadstar
Date: 16th May 2024

Shipping companies should start preparing now for the FuelEU Maritime regulation, as the deadline for submitting plans to monitor fuel type and consumption looms, warned the co-MD of maritime technology specialist.

FuelEU is part of the European Union’s Fit for 55 package, aiming to increase the use of renewable and low-carbon fuels in the shipping sector.

It demands that energy used by ships of more than 5,000 gross tonnes reduces each year, compared with a 2020 baseline: from 2% next year, to 80% by 2050.

The penalties for non-compliance would be issued on the document of compliance (DoC), rather than on the ‘polluter pays’ principle.

The size of the penalties incurred from FuelEU Maritime will depend on fuel mix, trading pattern and the amount by which a vessel misses the target, according to a source.

“The cost is significant, and will get more significant over time,” said the source.

The 31 August deadline for shipping companies to submit a monitoring plan that tracks fuel type and consumption for each EU voyage for each vessel, as required by FuelEU, is fast approaching.

The nearness of FuelEU implementation could mean stakeholders won’t have widely available access to alternative fuels.

Green fuel options in 2025 will be limited, so pooling strategies, forwarding of penalties, etc, will be important strategies for shipping companies.

This emissions regulation will add cost to those shipping into, out of, or between, EU ports to the EU ETS already in effect this year.

The EU ETS puts a tax on carbon emissions, meaning any reduction of emissions by burning less fuel is incentivised, such as by slow steaming, hull cleaning, etc.

FuelEU, however, relates to the quality of the fuel burnt.

FuelEU wants to make the industry invest in alternative low-GHG fuels. Simply burning less fuels is not enough, because the penalty is on the GHG intensity of the fuel mix: the emissions per unit of energy consumed.

And the two new regulations, especially by 2026 when the EU ETS is fully phased in, will put immense pressure on shipping to prioritise investment in green fuels and zero- emission ships.

If you don’t comply or act you will be punished twice, but if you do comply and act you will also benefit twice. So, both regulations enforce each other.

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