EU Marine Fuel Regulations: Impact on Shipping Emissions and Costs

The new European Union marine fuel rules, which came into effect on January 1, aim to reduce emissions in the shipping industry. While this regulation will lead to increased shipping costs for companies, those with vessels capable of running on alternative fuels like biodiesel and LNG will benefit. This policy is part of the EU’s broader efforts to address the industry’s carbon emissions, as shipping currently accounts for nearly 3% of global greenhouse gas emissions.

Under the FuelEU Maritime regulation, commercial ships above 5,000 gross tonnage operating in EU ports are required to reduce emissions from marine fuels or face penalties. However, biofuels and other alternative fuels for ships are in short supply, with competition from other sectors like aviation. As a result, shipping companies can expect rising costs, which will ultimately be passed on to consumers and businesses.

To comply with the new regulations, eligible ships must reduce bunker fuel emissions by 2% each year between 2025-2029, with a target of an 80% reduction by 2050. Switching to biofuel-blended bunker fuels and LNG is expected to be popular among companies seeking compliance. However, challenges remain, such as limited biofuel supply and fierce competition from other industries like aviation. Companies with vessels capable of running on alternative fuels stand to benefit the most from these new regulations.

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