Preparing for FuelEU Maritime

In recent years adapting to the decarbonization landscape has been a continuing challenge for shipowners. The Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Index (CII) were introduced in 2023, and in 2024, the EU Emissions Trading System (EU ETS) was extended to the shipping industry. Looking ahead, 2025 will mark the beginning of FuelEU Maritime.

FuelEU Maritime is a key element of the EU’s Fit for 55 Package aimed at shipping. Its objectives are to reduce the greenhouse gas (GHG) intensity of the energy used by ships, promote the use of shore-side electricity, and encourage the adoption of Renewable Fuels of Non-Biological Origin (RFNBOs). In this article, we address the most important elements of the initiative:

1. Progressive Reduction of GHG Intensity: The GHG intensity of a vessel accounts for CO2, methane and nitrous oxide emissions. Since January 2024, all GHGs have been reported under the EU’s Monitoring, Reporting, and Verification (MRV) system. Starting in 2025, vessels must use less GHG-intensive energy sources, beginning with a 2% reduction and increasing progressively to an 80% reduction by 2050 when compared to 2020.
2. Calculating GHG Intensity: The GHG intensity (or ’emission factor’) for different fuel types is calculated on a well-to-wake (WTW) basis, considering all GHG emissions from production, delivery, and combustion of the fuel. The GHG intensity varies significantly based on how the fuel is produced. Notably, biofuels derived from food and feed crops are treated as having the same emission factor as fossil fuels.
3. Scope and Timetable of FuelEU Maritime: FuelEU Maritime applies to commercial vessels of 5,000 GT and above. For intra-European voyages, 100% of emissions are counted, while 50% are counted for voyages to/from European ports. Currently, compliance responsibility falls on the entity accountable for the vessel’s International Safety Management (ISM) obligations, differing from the EU ETS, where it can be the shipowner or any organization assuming ISM responsibility. Data recording begins on 1 January 2025 and by 31 March, the company’s verifier must upload the data to the FuelEU Database. By 1 May, any compliance penalties must be paid and by 30 June, the FuelEU Document of Compliance must be issued.
4. Compliance Solutions: Shipping companies can comply with FuelEU Maritime primarily through the use of RFNBOs, as they count twice towards the vessel’s GHG intensity calculation. The concern is that the availability of RFNBOs is limited, and alternative compliance methods will be necessary, which at present have been identified as follows:
   • Biofuels: These can be blended with conventional fuels to lower GHG intensity, provided they are produced from non-food/feed crops. The Bunker Delivery Note will need to provide a sustainability annex and necessary data for FuelEU compliance.
   • Wind-Assisted Propulsion Systems (WAPS): Ships fitted or retrofitted with WAPS qualify for a “Wind Reward Factor,” reducing their overall GHG intensity.
   • Onshore Power Supply (OPS): Using OPS at berth is rated as zero GHG intensity. At this time, there is only a limited availability of these facilities.
   • Onboard Carbon Capture (OCC): This is currently not provided for but will be reconsidered in 2027.
5. Penalties for Non-Compliance: Unlike CII, non-compliance with FuelEU Maritime could result in financial penalties, calculated at €2,400 per metric ton of excess energy.
6. Pooling and Banking: FuelEU Maritime allows for GHG intensity to be pooled between ships to encourage investment in alternative fuel-powered vessels. For instance, a shipowner with an ammonia-powered vessel could pool its lower GHG intensity with other conventional-fuel ships in its fleet. Surplus compliance credits can also be sold to other shipowners or kept for future use.

In order to prepare for FuelEU Maritime, members should ensure that their charter parties include provisions for future compliance, in particular for the use of lower GHG intensity fuels, qualifying biofuels, RFNBOs, or retrofitting vessels with WAPS. Standard time charter parties typically do not allow shipowners to require charterers to use qualifying biofuels or RFNBOs. Efforts are ongoing to standardise contracts and clauses, including BIMCO FuelEU Maritime and Biofuels Clauses.

The NNPC is closely monitoring developments in relation to FuelEU Maritime, and members are encouraged to reach out to the NNPC claims team for advice.