FuelEU Maritime - Compliance steps for ship operators.

FuelEU Maritime - Compliance steps for ship operators.

FuelEU Maritime is a crucial regulation aimed at decarbonizing the maritime sector and aligning it with the EU's overarching climate goals. This guide provides advanced insights and specific operational details essential for shipping operators to effectively ensure compliance and strategically plan their operations.

Purpose of FuelEU Maritime

The FuelEU Maritime regulation, as set out in Regulation (EU) 2023/1805, aims to reduce the greenhouse gas intensity of maritime fuels, thereby contributing to the EU's goal of becoming climate neutral by 2050. This regulation mandates the use of low GHG intensity fuels and emission-free technologies to meet prescribed GHG intensity limits.

Scope of the regulation.

FuelEU Maritime applies to ships over 5,000 gross tons (GT) engaged in commercial operations and calling at ports within the European Union (EU) and the European Economic Area (EEA). The regulation applies both to voyages within the EU and to voyages between EU and non-EU ports.

Key provisions:

1. Greenhouse gas intensity limits: Ships must comply with specific greenhouse gas intensity limits, measured in grams of CO2 equivalent per megajoule (gCO2 eq/MJ), based on energy used on board. This is calculated from reported fuel consumption and emission factors.
2. Shore Power Supply (OPS): Container ships and passenger ships must be connected to shore power or use zero emission technology while berthed in EU/EEA ports from 2030.
3. Monitoring and reporting: Ships must monitor fuel consumption and other relevant data according to their FuelEU Monitoring and Reporting Plan and submit an annual report to an accredited verifier.

1. Treatment of vessels sold during the reporting year.

According to FuelEU Maritime Regulation (EU) 2023/1805, there are specific provisions for the treatment of vessels sold during the reporting year to ensure accurate monitoring and reporting of fuel consumption and greenhouse gas emissions. These provisions ensure that both the previous and new owner are held accountable for their respective ownership periods.

When a vessel is sold during the reporting period, the regulation outlines specific steps for data processing and compliance obligations. According to Article 15(4) of Regulation (EU) 2023/1805:

• Notification by transferring company:

The company transferring the ship must notify the verifier of the information referred to in paragraph 1 for the period during which it operated the ship. This notification should include all relevant data on fuel consumption, greenhouse gas emissions and other required measurement data for the period during which the ship operated.

• Verification and record keeping:

The information provided by the transferring company should be verified and registered in the FuelEU database by the verifier who performed the verification activities for the ship under the transferring company. This process should be carried out as close as possible to the transfer date and should be completed no later than one month after the transfer.

• Responsibility of the new operator:

The shipping company responsible for operating the ship on December 31 of the reporting period is responsible for the ship's compliance throughout the reporting period, even if multiple transfers have occurred during that period. This ensures ongoing compliance and accurate reporting throughout the year, regardless of changes in ownership.

Sample scenario

Consider a vessel sold on June 30 of the reporting year:

• Previous owner:
  • The company that operated the vessel from January 1 to June 30 must collect all relevant fuel consumption and GHG emissions data for this period. They must immediately provide this information to the verifier.
  • The verifier must then verify this data and register it in the FuelEU database by July 31.
• New owner:
  • The company that takes over on July 1 is responsible for monitoring and reporting data from this date until December 31.
  • Even if the new owner only operated the vessel for part of the year, they must ensure compliance with all FuelEU Maritime requirements for the entire reporting period, consolidating data from both ownership periods.

By complying with these provisions, the regulation ensures that the vessel's fuel consumption and greenhouse gas emissions are accurately tracked and reported, ensuring continued compliance during the transfer of ownership.

Compliance obligations

When a ship is sold during the reporting year, responsibility for monitoring, reporting and verification (MRV) of fuel consumption and GHG emissions is divided between the previous and new owner based on their ownership period. Each owner must ensure the completeness and accuracy of the data for their respective ownership periods.

Reporting requirements

Both the previous and new owner must submit detailed reports for their ownership periods. These reports must include the following

• Fuel consumption data.
• Greenhouse gas emissions.
• Compliance with greenhouse gas intensity limits
• Any operational details relevant to the reporting period

Example:

Consider a vessel sold on June 30 within the reporting year:

• Previous owner/manager: The previous owner is responsible for monitoring and reporting data from January 1 to June 30. He must ensure that all data for this period is complete and accurate and submit it to an accredited verifier.
• New owner/manager: The new owner is responsible from July 1 to December 31. He must verify and report the data for this period and ensure compliance with all legal requirements.

Impact: By dividing reporting responsibilities, both owners are responsible for their respective periods, ensuring complete and accurate data submission for the entire reporting year. This method maintains the integrity of the monitoring and reporting process and ensures compliance with FuelEU Maritime regulations.

Benefit: This approach provides a clear framework for dealing with changes in vessel ownership within the reporting year, reducing the risk of noncompliance due to data gaps or inaccuracies. It ensures that the ship's GHG emissions and fuel consumption are accurately recorded and reported, ensuring regulatory compliance and avoiding potential penalties.

2. Biofuel blend allocation.

Ships making international voyages and using renewable and low-carbon fuels during their voyage can include these fuels in the calculation of greenhouse gas intensity for the relevant reporting period. According to Article 10 of FuelEU, all renewable and low-carbon fuels meeting the relevant criteria can be considered to contribute half of the energy used during these international voyages. This allocation is allowed up to the maximum energy amount specified in Article 2(1)(d) of FuelEU Maritime. This provision also applies to similar fuels used during voyages arriving at or departing from ports in outermost regions under the authority of a Member State, in accordance with Article 2.4 of FuelEU.

Although fuel consumption must be reported "per trip," the average annual greenhouse gas intensity of energy used on board is calculated based on the total mass of fuel consumed annually per energy consumer.

Examples:

1. Bio-blend B30 (30% biodiesel + 70% fossil diesel): The entire biodiesel fraction can be counted to cover energy consumption during an international voyage.
2. Bio-blend B60 (60% biodiesel + 40% fossil diesel): A part of the biodiesel fraction can be counted for covering the energy used during an international trip, up to the maximum amount of energy allowed by the regulation.

3. Benefits of electric propulsion

According to FuelEU Maritime's regulations, ships using electric propulsion systems, especially those powered by renewable energy sources, can achieve significant benefits in meeting greenhouse gas intensity targets. Electric propulsion systems are recognized for their potential to produce no GHG emissions during operation, which directly contributes to compliance with GHG intensity limits and can reduce the need for derogations related to shore-side power supply (OPS) requirements.

Compliance and efficiency.

Electric propulsion systems eliminate the emissions associated with burning conventional fuels, providing an easy path to zero-emission travel. This not only facilitates compliance with the strict greenhouse gas intensity thresholds set by FuelEU Maritime, but also positions ships favorably for future regulatory changes seeking even lower emissions.

Operational flexibility

Electric propulsion provides operational flexibility, allowing ships to switch to zero-emission operations, particularly in Emission Control Areas (ECAs) and when berthed in ports requiring OPS connections. This flexibility is critical to remain compliant with current and anticipated future regulations.

Example:

Consider a ship with a hybrid propulsion system that can switch between conventional fuel engines and electric propulsion powered by on-board batteries charged from renewable energy sources:

• Scenario: The ship runs on conventional fuel for long-distance international voyages, but switches to electric propulsion when entering EU/EEA ports and while berthed.
• Impact: During the periods of electric propulsion, the ship records no GHG emissions, significantly reducing the overall GHG intensity for the reporting period.
• Benefit: This approach ensures that the ship stays well within greenhouse gas intensity limits, reduces the need for deviations and avoids potential fines for noncompliance. In addition, it provides operational cost savings by reducing fuel consumption and associated emissions costs.

By using electric propulsion, shipping companies can effectively adapt to FuelEU Maritime's regulatory framework, ensuring compliance while benefiting from improved operational efficiency and sustainability.

Deviations and flexibility

• Unavailable shore power supply (OPS):
  • Vessels are exempt from the requirement to connect to OPS if the berth where they are moored does not have an OPS connection.
• Insufficient or unstable power supply:
  • Ships may claim an exemption if the OPS power supply is insufficient to meet the ship's energy needs or is unstable, which may cause operational problems.
• Technical Incompatibility:
  • Exemptions are granted if there is a technical incompatibility between the ship's systems and the OPS infrastructure in port, making it impractical to connect.

Specific technical deviations

Ice class ships

Ice class ships, which are specifically designed for use in icy waters, may be exempt from certain regulations due to their unique operational and structural characteristics. These ships typically have more robust propulsion and hull structures, which affect their energy efficiency and greenhouse gas intensity. Regulation (EU) 2023/1805 provides specific exemptions and adjustments for these vessels to take into account their additional energy consumption:

• Energy consumption exemptions:

  • For ice classes IC, IB, IA or IA Super (or equivalent): Companies can request until December 31, 2034 to disregard the additional energy consumption due to sailing in ice conditions.
  • For ice classes IA or IA Super (or equivalent): Companies may request to disregard the additional energy consumption due to the technical characteristics of the ship.

• Calculation of adjusted fuel mass for ice sailing:

  • The regulation provides formulas for calculating additional energy consumption and adjusted fuel mass for compliance calculations.
  • The adjustments take into account the energy consumed by both the technical characteristics of the ice class and the energy used while sailing in ice conditions.

Safety or navigational issues.

Vessels may request an exception if connecting to shore power (OPS) poses risks to the safety of the vessel, crew, or port infrastructure, or if it interferes with the vessel's navigational capabilities.

Operational requirements.

Ships deployed for operations requiring continuous power for essential equipment that cannot be supported by OPS qualify for specific exceptions described in Regulation (EU) 2023/1805. Paragraph 5 of Article 6 lists the following exceptions:

1. Short mooring time: Ships moored for less than two hours are exempt from the use of OPS.
2. Emission-free technologies: Ships using zero-emission technologies for all power consumption at their berth are exempt.
3. Unscheduled port visits: Exemptions may be requested for unscheduled port calls due to unforeseen circumstances beyond the ship's control.
4. Unavailability of OPS: If OPS connection points are not available in a port, vessels may claim this variance.
5. Power grid stability: Vessels are exempt if shore power is insufficient to meet the vessel's electrical demand at berth.
6. Incompatibility: If the shore installation is not compatible with the OPS equipment on board, provided the onboard installation meets the technical specifications in Annex II of Regulation (EU) 2023/1804.
7. Emergency situations: Onboard power generation is permitted in emergency situations that pose an immediate danger to human life, the ship or the environment.
8. Maintenance and testing: If connected to OPS, ships are allowed to use on-board power generation for necessary maintenance or functional testing.

These exceptions ensure that ships can continue to conduct essential operations when OPS is not feasible or available.

Limitations on deviations.

• Maximum deviations allowed:
  • The total number of deviations related to OPS connection is limited to no more than 10% of the ship's total number of port calls during the reporting period. If the vessel makes fewer port calls, the deviation limit is set at 10 port calls for that period.

Penalty calculations for non-compliance.

Penalties for non-compliance with the FuelEU Maritime Regulation are calculated based on specific criteria to ensure deterrence and enforce compliance. The penalties cover various aspects of non-compliance, including GHG intensity, RFNBO sub-objective, OPS requirements and consecutive periods of non-compliance.

1. Non-compliance with GHG intensity.

Penalties for non-compliance with GHG intensity are determined by excess GHG emissions relative to the required intensity. The penalty calculation is detailed in Article 23 and Annex IV of Regulation (EU) 2023/1805.

• Penalty formula:

• Example: If a ship's actual GHG intensity exceeds the limit by 5 gCO2 eq/MJ over 10,000 MJ of energy used, the penalty would be calculated to emphasize the need for strict compliance.

2. Non-compliance with the RFNBO sub-objective.

For non-compliance with the RFNBO sub-objective (Renewable fuels of non-organic origin), the penalty is calculated as follows:

• Penalty formula:

The compliance balance for RFNBO (CBRFNBO) is divided by 41,000 and then multiplied by the price differential (Pd) to determine the penalty amount referred to in Article 23(2).

3. Non-compliance with Onshore Power Supply (OPS) requirements.

Fines for non-compliance with Onshore Power Supply (OPS) requirements are based on the vessel's demand for power at berth and the duration of non-compliance.

FuelEU Penalty (OPS) = Total Electric Power Demand x Total Hours at Berth in Non-Compliance x Average Union Electricity Price x 2

Details: The penalty is proportional to the cost of electricity consumption and is designed to discourage the use of more polluting energy sources. This is expressed as a fixed amount in euros, based on the average electricity price in the Union for non-household consumers, multiplied by a factor of two to take into account additional costs associated with providing the service, including connection costs and elements to recover investments.

4. Increased penalty for consecutive instances of non-compliance.

If a vessel has a compliance deficiency for two or more consecutive reporting periods, the penalty amount is increased to enforce compliance.

• Penalty formula:

Where n is the number of consecutive reporting periods.

• Explanation: This formula ensures that the penalty for repeated noncompliance becomes progressively more severe, removing any economic benefit from continued noncompliance and promoting compliance.

These penalties are intended to be severe and deterrent, ensuring a level playing field in the maritime industry and encouraging compliance with the FuelEU Maritime Regulation.

Reporting requirements

Ships must submit an annual report, verified by an accredited verifier, that includes the following:

• Detailed fuel consumption data.
• Greenhouse gas emissions.
• Compliance with greenhouse gas intensity limits.
• OPS usage and invoked variances.

This report must be complete to avoid discrepancies that could result in fines for noncompliance.

Exemptions and special cases.

Certain vessels, such as those conducting non-commercial activities (e.g., military vessels), are exempt. In addition, voyages not involving EU/EEA ports are excluded from the scope of the regulation, providing some relief for specific operational routes.

Normec Verifavia's expertise

Normec Verifavia has been at the forefront of emissions verification since 2018. Accredited by COFRAC under ISO 17029 and by UKAS for UK MRV, we have verified emissions for more than 2,000 ships for more than 300 companies in 40 countries under various regulations, including EU ETS, EU MRV, UK MRV, IMO DCS, CII and FuelEU Maritime. Our extensive experience ensures that we deliver the highest standards of transparency and reliability in greenhouse gas emissions verification.

Conclusion

Ensuring FuelEU Maritime compliance requires a thorough understanding of the detailed regulatory provisions and advanced compliance strategies. By leveraging our expertise, shipping companies can effectively navigate this complexity, ensuring both compliance and operational efficiency. Normec Verifavia for comprehensive verification services to ensure your fleet remains compliant with the latest maritime regulations.