Understanding Compliance Under Fuel EU Maritime

The Fuel EU Maritime Regulation, effective from January 1, 2025, mandates that vessels over 5,000 gross tonnage reduce their greenhouse gas (GHG) emissions progressively. Compliance is monitored through a detailed reporting system, requiring shipowners to submit a monitoring plan by August 31, 2024.

Compliance Mechanisms: Shipowners who do not meet the target GHG intensity for the period defined in Fuel EU maritime regulation can choose between two primary compliance strategies: paying penalties for non-compliance or utilizing flexibility mechanisms like banking, borrowing and pooling.

The penalty system imposes significant financial consequences for exceeding GHG intensity limits, calculated based on the deficit multiplied by energy use. Penalties can escalate with repeated non-compliance, reaching €2,400 per tonne of energy equivalent to the usage of VLSFO (Very Low Sulphur Fuel Oil).

Pooling Mechanism: Alternatively, the pooling mechanism allows multiple vessels to collectively manage their GHG compliance. Ships that exceed their targets can compensate for those that fall short by pooling their compliance balances. This collaborative approach not only mitigates financial risks but also promotes the adoption of renewable fuels across the fleet.

Pooling enables the shipowners to pool the emissions of several vessels and allows those with a surplus of compliance to offset the deficits of others. Aggregation of emissions enables shipowners to deal better with uncertainties related to the availability of fuels, particularly renewable fuels. Flexibility would ensure that vessels could comply even in situations where the supplies of biofuels are fluctuating.

The pooling mechanism provides a strategic pathway for shipowners to gradually transition their fleets to greener technologies without immediate pressure to comply fully with stringent regulations. This flexibility allows for a more manageable adaptation to new fuel sources and technologies over time.

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