Just over a month remains until the European Union (EU) enforces the FuelEU Maritime regulation on 1 January 2025. This is the latest in a string of maritime regulations as part of the ‘Fit for 55’ policy, which seeks to reduce GHG emissions by 55% by 2030.
FuelEU Maritime aims to promote renewable and low-carbon fuels and bring forward their large-scale production. Focusing on Well-To-Wake (WTW) emissions, this will be achieved by restricting the greenhouse gas (GHG) intensity limit of energy used on board or reducing the carbon content of fuel used in the maritime industry. The intended outcome is the widespread use of biofuel in the short term, paving the way for alternative fuels in the future.
But what will the FuelEU Maritime regulation mean in practice, and how can Spinergie help clients ensure they are well-equipped and supported in maintaining compliance with it?
FuelEU Maritime: the plan and impact
First, it is helpful to fully understand the regulation's process and how it will work once it is implemented.
At its core, FuelEU Maritime will set maximum limits for the yearly average GHG intensity of the energy used by ships over 5,000 tons. It will only apply to ships calling at European ports regardless of their flag. It covers 100% of voyages between two EU or EEA ports and 50% of voyages between EU or EEA ports and a port outside of the region.
The regulation plan sets targets to decrease the GHG intensity of maritime fuels over time, from 2% in 2025 to 80% by 2050. However, the ambitions of the targets will increase to reflect technological developments as well as the increased production and use of renewable and low-carbon fuels. These targets are broad in scope to cover the full lifecycle of fuels used on a WTW basis, meaning not only CO2 but also methane and nitrous oxide emissions are covered.
While ship operators can decide which fuels to use for their operations, additional sub-targets surround using Renewable Fuels of Non-Biological Origin (RFNBOs) or e-fuels to promote their usage. A mandatory 2% sub-target for such fuels will be implemented to accelerate their usage if they account for less than 1% of the total energy used by 2031. Further incentives will apply for the use of RFNBOs.
FuelEU Maritime goes further still in its zero-emission requirements by including ships at berth to mitigate in-port emissions. It mandates using an on-shore power supply or alternative zero-emission technologies while passenger ships and containerships are in port.
The first deadlines have passed, and all companies should have submitted a monitoring plan for each ship in their fleet by August 31, 2024.
Next Steps:
- From January 1, 2025: The regulation now applies in full. Companies must record data for each ship’s arrivals and departures at EU ports.
- January 31, 2026: At the first annual report deadline, a ship-specific ‘FuelEU Report’ must be sent to the verifier.
- March 30, 2026: The verifier will record the verified report in the FuelEU database.
- June 30, 2026: The FuelEU Document of Compliance (DoC) must be onboard, and penalties must also be paid by this deadline.
The cost of non-compliance with FuelEU Maritime
Non-compliance with the FuelEU Maritime regulation has the potential to be highly costly for shipowners. Essentially, ships with a higher GHG intensity than the requirement will be penalized according to the compliance deficit.
The penalty for non-compliance is calculated based on the “Compliance Balance” reported at the end of the reporting year. This compliance balance is calculated by subtracting the ship’s GHG Intensity from that year's FuelEU GHG Intensity target.
The resulting balance is the basis for calculating the penalty.
Furthermore, if a company has a compliance deficit for two or more consecutive reporting periods, it faces an increased penalty, which is adjusted based on the duration of consecutive non-compliance.
If penalties are unpaid, additional consequences can include expulsion from ports, flag detentions, and potentially restricted access to ports in multiple EU member states.
A series of flexible mechanisms, including pooling, banking, and borrowing, will help shipowners meet compliance requirements.
Pooling
Pooling uses excess GHG reductions from one ship to offset shortfalls in another ship. This can be undertaken “in-house” among a shipowner’s fleet or in collaboration with another company. There will be strict rules in place for pooling. Shipowners must confirm their intentions to pool within the FuelEU Maritime database, with all pool details to be validated by all participating companies. Furthermore, a ship’s compliance balance must only be included in one pool within the same reporting period. However, two separate pools may be used for the GHG intensity target and the RFNBO subtarget.
Banking
Banking allows shipowners to bring a ship’s prior GHG surplus balances into a future compliance period. This can occur in one, two, or more successive years as the banked surplus does not expire. Additionally, the banked surplus will be cumulative should the compliance balance be positive at the end of each reporting period.
Borrowing
Borrowing is a temporary solution as it involves ships borrowing compliance credit from a future period to meet the current compliance requirements. It is anticipated that this will only be used during periods of underperformance and will not be an effective long-term strategy.
The role of Spinergie’s digital reporting in FuelEU Maritime compliance
Ship owners must collect every required data point at the right time to ensure FuelEU Maritime compliance. Ensuring the accuracy of this data will be one of the biggest challenges in meeting compliance, but digitalizing operations and, crucially, reporting will be a significant step.
Myriad data points must be accurately recorded to fulfill compliance requirements, including (but not limited to):
- Operational data, including distance traveled and cargo on board.
- Departure and arrival dates and times, including duration of stay at berth, for each port.
- Details of connections to onshore power supplies while in port and the amount of electricity received.
- Exact details of fuel consumption and substitute energy sources at berth and at sea.
- Reported well-to-tank and tank-to-wake emission factors for all fuel types, including all GHGs.
Spinergie’s digital smart reporting solution provides the means to accurately collect this high-quality fuel consumption and operational data.
Streamlined, reliable reporting
Reporting is at the heart of Spinergie’s solution, providing customization tailored to each client, intuitive and user-friendly navigation, and a minimal learning curve. Reports are populated using a combination of mandatory and automatic field entries. This guided system ensures consistency and that no crucial data points are missed.
Robust quality controls further reinforce onboard reporting procedures. Retroactively checking reports for inconsistencies across multiple data sources and spreadsheets is a common pain point for shipping teams. Spinergie addresses this challenge head-on by incorporating quality checks directly into the reporting process.
The system guides users toward accurate data entry from the outset and provides real-time feedback. Immediate identification of potential issues prevents errors from cascading through the reporting process, saving time and enhancing data integrity.
This fully secure reporting environment both protects sensitive information and provides direct submission to verifiers.
Fully-integrated verification
Spinergie, a DNV-integrated partner, offers a comprehensive solution for meeting verification requirements. The solution streamlines the FuelEU Maritime reporting process by automating data collection and verification.
Reducing manual data entry and streamlining emissions statement generation simplifies reporting while ensuring adherence to FuelEU Maritime, EU-MRV, and IMO-DCS standards. Additionally, the secure environment protects sensitive information and facilitates direct submission to verifiers.
Companies also benefit from consistent data quality and reduced administrative burdens associated with multiple data entries for internal and external reports.
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Real-time analysis
Spinergie’s live-tracking capabilities, reinforced with sensor data and activity tracking, give users a real-time account of consumption levels. This data populates user-friendly analysis dashboards that provide at-a-glance and granular details to help users understand compliance levels on a day-to-day basis.
Such in-depth data provides the root cause analysis required to identify and address the underlying issues impacting over-consumption or underperformance. This data-driven approach is the only way to ensure accurate identification of where improvements can be made.
Planning
With data points secured, users can use Spinergie’s analysis to adapt plans and operations to suit their compliance targets. In-depth analytics guide users to understand what steps to take to avoid non-compliance, whether assigning ships to a banking or borrowing situation or assessing any pooling needs.
The solution adapts along with your operations, meaning there is no need for drastic overhauls or learning new systems with each operational change. Likewise, it means the system evolves to meet any new regulatory requirements or adapts to differing regional needs for those with global fleets.
Conclusion
FuelEU Maritime compliance presents a significant challenge for maritime players. To meet the ambitious targets and stringent requirements of the regulation, ship owners must accurately collect and report a vast array of data points related to vessel operations and fuel consumption. This brings a problem: how best to gather the data while also discovering the crucial points needed to navigate the regulation as targets narrow?
Spinergie's digital smart reporting solution offers a comprehensive solution to this challenge. By automating data collection, ensuring data accuracy, and providing real-time analytics, Spinergie empowers maritime players to streamline compliance efforts, optimize operations, and achieve sustainable, regulatory-compliant practices.
Additional Reporting by Drashya Goel.
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