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 in-depth insights and specific operational details that are essential for shipping companies to effectively ensure compliance and strategically plan their operations.

Purpose of FuelEU Maritime

The FuelEU Maritime regulation, as set forth in Regulation (EU) 2023/1805, aims to reduce the greenhouse gas intensity of maritime fuels and thereby contribute to the EU’s goal of achieving climate neutrality by 2050. This regulation mandates the use of low-GHG-intensity fuels and zero-emission technologies to meet the prescribed GHG-intensity limits.

Scope of the Regulation

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

Key provisions:

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

1. Treatment of Ships Sold During the Reporting Year

Under the FuelEU Maritime Regulation (EU) 2023/1805, there are specific provisions for the treatment of ships 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 the new owners are held accountable for their respective periods of ownership.

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

• Notification by the 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 must include all relevant data on fuel consumption, greenhouse gas emissions, and other required measurement data for the period during which the ship was in operation.

• Verification and registration:

The information provided by the transferring company must be verified and recorded in the FuelEU database by the verifier who conducted the verification activities for the ship while it was under the transferring company’s operation. This process must be carried out as close as possible to the transfer date and must be completed no later than one month after the transfer.

• Responsibility of the new operator:

The shipping company responsible for operating the vessel as of December 31 of the reporting period is responsible for the vessel’s compliance with the requirements throughout the entire reporting period, even if multiple transfers occurred during that period. This ensures continuous compliance and accurate reporting throughout the year, regardless of changes in ownership.

Example Scenario

Consider a ship that is sold on June 30 of the reporting year:

• Previous owner:
  • The company that operated the vessel from January 1 through June 30 must collect all relevant data on fuel consumption and greenhouse gas emissions for this period. They must immediately submit 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 the vessel on July 1 is responsible for monitoring and reporting data from that date through December 31.
  • Even if the new owner operated the vessel for only part of the year, they must ensure that all FuelEU Maritime requirements are met for the entire reporting period, consolidating data from both periods of ownership.

By adhering to these provisions, the regulation ensures that the ship’s fuel consumption and greenhouse gas emissions are accurately tracked and reported, thereby maintaining regulatory compliance during the transfer of ownership.

Compliance Obligations

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

Reporting Requirements

Both the previous and new owners must submit detailed reports covering their respective periods of ownership. These reports must include the following

• Data on fuel consumption
• Greenhouse gas emissions
• Compliance with greenhouse gas intensity limits
• All operational details relevant to the reporting period

Example:

Consider a vessel that was sold on June 30 during the reporting year:

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

Impact: By dividing the reporting responsibilities, both owners are accountable for their respective periods, ensuring that the data for the entire reporting year is submitted completely and accurately. 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 handling changes in ship ownership within the reporting year, thereby reducing the risk of non-compliance due to data gaps or inaccuracies. It ensures that the ship’s greenhouse gas emissions and fuel consumption are accurately recorded and reported, thereby ensuring regulatory compliance and avoiding potential fines.

2. Allocation of Biofuel Blends

Ships making international voyages that use renewable and low-carbon fuels during their voyage may 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 that meet the relevant criteria may be considered to contribute to half of the energy used during these international voyages. This allocation is permitted up to the maximum energy quantity 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 jurisdiction of a Member State, in accordance with Article 2(4) of FuelEU.

Although fuel consumption must be reported “per voyage,” the average annual greenhouse gas intensity of the 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 may be counted toward covering energy consumption during an international voyage.
2. Bio-blend B60 (60% biodiesel + 40% fossil diesel): A portion of the biodiesel fraction may be counted toward covering the energy used during an international voyage, up to the maximum amount of energy permitted under the regulation.

3. Benefits of Electric Propulsion

Under FuelEU Maritime regulations, ships using electric propulsion systems—particularly 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 greenhouse gas emissions during operation, which directly contributes to compliance with greenhouse gas intensity limits and may reduce the need for exemptions regarding shore power supply requirements (OPS).

Compliance and Efficiency

Electric propulsion systems eliminate the emissions associated with the combustion of conventional fuels, thereby offering a straightforward path to zero-emission voyages. 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 aimed at even lower emissions.

Operational Flexibility

Electric propulsion offers operational flexibility, allowing ships to switch to zero-emission operations, particularly in Emission Control Areas (ECAs) and when berthed at ports that require OPS connections. This flexibility is crucial for continuing to comply 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 onboard batteries charged using renewable energy sources:

• Scenario: The ship operates on conventional fuel for long-distance international voyages but switches to electric propulsion when entering EU/EEA ports and while berthed.
• Impact: During periods of electric propulsion, the ship emits no greenhouse gases, significantly reducing its total greenhouse gas intensity for the reporting period.
• Benefit: This approach ensures that the ship remains well within greenhouse gas intensity limits, reduces the need for exemptions, and avoids potential fines for non-compliance. Furthermore, it yields operational cost savings by reducing fuel consumption and the associated emission costs.

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

Exemptions and Flexibility

• Unavailable shore power supply (OPS):
  • Ships 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 power supply from shore-based power is insufficient to meet the ship’s energy needs or is unstable, which could cause operational problems.
• Technical Incompatibility:
  • Exemptions are granted if there is a technical incompatibility between the vessel’s systems and the OPS infrastructure in the port, making it impractical to connect.

Specific Technical Exceptions

Ice-class vessels

Ice-class ships, which are specially designed for use in icy waters, may be exempt from certain requirements 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 for specific exemptions and adjustments for these ships to account for their additional energy consumption:

• Exemptions for energy consumption:

  • For ice classes IC, IB, IA, or IA Super (or equivalent): Companies may request, until December 31, 2034, that the additional energy consumption resulting from navigation in ice conditions be disregarded.
  • For ice classes IA or IA Super (or equivalent): Companies may request that the additional energy consumption resulting from the ship’s technical characteristics be disregarded.

• Calculation of the adjusted fuel mass for ice navigation:

  • The regulation provides formulas for calculating the additional energy consumption and the 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 navigating in ice conditions.

Safety or navigation issues

Ships may apply for an exemption if connecting to shore power (OPS) poses risks to the safety of the ship, the crew, or the port infrastructure, or if it impedes the ship’s navigational capabilities.

Operational requirements

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

1. Short Berthing Duration: Ships that are berthed for less than two hours are exempt from using OPS.
2. Zero-emission technologies: Ships that use zero-emission technologies for all power consumption while at berth are exempt.
3. Unplanned port calls: Exemptions may be requested for unplanned port calls resulting from unforeseen circumstances beyond the ship’s control.
4. Unavailability of shore power: If shore power connections are not available in a port, ships may claim this exemption.
5. Grid stability: Ships are exempt if shore power is insufficient to meet the ship’s electrical demand while at berth.
6. Incompatibility: If the shore-based installation is incompatible with the onboard OPS equipment, provided that the onboard installation complies with the technical specifications in Annex II of Regulation (EU) 2023/1804.
7. Emergencies: Onboard power generation is permitted in emergency situations that pose an immediate threat to human life, the vessel, or the environment.
8. Maintenance and testing: When connected to OPS, ships may use onboard power generation for necessary maintenance or functional tests.

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

Restrictions on Exceptions

• Maximum permitted deviations:
  • The total number of deviations regarding OPS connection is limited to a maximum of 10% of the ship’s total number of port calls during the reporting period. If the ship makes fewer port calls, the deviation limit is set at 10 port calls for that period.

Calculation of Fines 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 greenhouse gas intensity, the RFNBO sub-target, OPS requirements, and consecutive periods of non-compliance.

1. Non-compliance with greenhouse gas intensity

Penalties for non-compliance with the greenhouse gas intensity requirement are determined by the excess greenhouse gas emissions relative to the required intensity. The penalty calculation is described in detail 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-target

For non-compliance with the RFNBO (Renewable Fuels of Non-Biological Origin) sub-target, 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 difference (Pd) to determine the penalty amount as referred to in Article 23(2).

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

The fines for non-compliance with the regulations regarding the use of shore-based power supply (OPS) are based on the vessel’s power demand at the berth and the duration of the non-compliance.

FuelEU Fine (OPS) = Total demand for electrical power × Total number of hours at berth in non-compliance × Average electricity price in the Union × 2

Details: The fine is proportional to the cost of electricity consumption and is intended 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-non-residential consumers, multiplied by a factor of two to account for additional costs associated with providing the service, including connection fees and elements to recoup investments.

4. Increased Penalty for Consecutive Instances of Noncompliance

If a vessel fails to comply for two or more consecutive reporting periods, the fine amount will be increased to enforce compliance.

• Penalty formula:

where n is the number of consecutive reporting periods.

• Explanation: This formula ensures that the penalty for repeated non-compliance becomes progressively more severe, thereby eliminating any economic advantage of continued non-compliance and promoting compliance with the regulations.

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

Reporting Requirements

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

• Detailed data on fuel consumption.
• Greenhouse gas emissions.
• Compliance with greenhouse gas intensity limits.
• Use of OPS and invoked exemptions.

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

Exemptions and Special Cases

Certain ships, such as those engaged in non-commercial activities (e.g., military vessels), are exempt. Additionally, voyages that do not involve EU/EEA ports are excluded from the scope of the regulation, which provides 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 vessels for over 300 companies in 40 countries under various regulatory frameworks, including the 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 the verification of greenhouse gas emissions.

Conclusion

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