EU Implements FuelEU Maritime Mandate w.e.f 01 Jan

The European Union’s new carbon-intensity mandate, FuelEU Maritime, took effect on January 1, impacting European shipping interests. This mandate requires shipping companies to make decisions regarding fuel-efficiency and low-carbon propulsion. Options for compliance include paying higher taxes, reducing fuel consumption, or switching to reduced-emissions fuel sources. To achieve emission goals, the EU has implemented progressively higher fees on emissions per tonne of transport work for ships over 5,000 GT. This fee structure is part of the EU’s plan to reduce greenhouse gas intensity from shipping by 80 percent by 2050 compared to 2020 levels.

Shipowners are now required to record and report the well-to-wake greenhouse gas intensity of each vessel’s operations to comply with the legislation. Non-compliance comes with a hefty penalty of €2,400 per tonne of VLFSO energy equivalent for emissions exceeding the limit, which is triple the price of bunker fuel. To avoid these penalties, operators can pool emissions among multiple ships or borrow from future compliance years to reduce costs. The ultimate goal is to comply with the FuelEU intensity targets, which require a two percent reduction this year, decreasing every five years to achieve an 80 percent reduction by 2050.

While European owners support the new regulation, they fear it may make them less competitive globally if it remains a regional requirement. Danish Shipping, representing operators like Maersk, Torm, and Stena, emphasizes the need for global climate regulation in the shipping industry. The director of environment at Danish Shipping, Nina Porst, hopes that FuelEU Maritime will drive the demand and production of green fuels for shipping. She stresses the importance of EU countries pushing for international rules within the International Maritime Organization (IMO) to ensure regulations apply regardless of where ships operate.

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