On 23 March 2023, the European Parliament reached a provisional agreement on the text of the Fuel EU Maritime Regulation, which was subsequently approved on 25 July 2023 by the European Council upon it’s first reading of the proposed text. The Council has since published Fuel EU Maritime Regulation 2023/1805 (FEM) in the EU’s official journal on 22 September 2023, which subsequently entering into force on 12 October 2023, although its transposition directly into the law of each Member State will apply from 1 January 2025.
The FEM is a part of the EU’s Fit for 55 Package that promotes the use of renewable and low-carbon fuels, pursuant to which 86-88% of the international maritime transportation fuel mix should constitute low carbon fuels in line with the EU’s targets for 2050. According to the preliminary agreement, the regulation’s main targets are (i) an obligation as of 2030 for certain types of vessels to use onshore power supply while at berth in EU ports for calls lasting more than two hours and (ii) to introduce mandatory mitigation of energy use and associated greenhouse gas intensity of ships.
The regulation will be applicable to vessels of 5000 gross tonnes and above entering EU waters (with certain exemptions), regardless of their flag, and will apply in relation to 100% of energy used for voyages between two EU ports of call and at berth. In terms of voyages between an EU port and an extra-EU port, the FEM will apply to 50% of energy used in those voyages.
There are three types of greenhouse gas (GHG) emissions included in the scope of the FEM, namely carbon, methane and nitrogen oxide. With a view to reducing these GHG emissions, the regulation contemplates annual reduction targets increasing progressively until 2050. This gradual increase reflects developments in low-carbon fuel technology and the trajectory for emissions reduction is as follows:
- 2% by 2025
- 6% by 2030
- 14,5% by 2035
- 31% by 2040
- 62% by 2045
- 80% by 2050
Ship operators will also have to submit monitoring plans during 2024 to confirm the method by which they will monitor emissions to evidence compliance with the GHG reduction targets set out by the regulation. The monitoring will have to be externally verified, as will the reporting under it, with a “FuelEU” certificate being issued for each compliant ship.
Ships will be checked at ports across the EU as part of usual vessel inspections and vessels deemed to be non-compliant with either the limits of GHG intensity or the use of offshore power supply, will be subject to penalties. Accordingly, shipping companies will need to calculate GHG emissions per unit of energy used on board (both at port and during operation), based on their reported fuel consumption and the emissions factors of their respective fuels.
The impending transposition of the FEM is expected to impact shipping in EU waters not only in terms of fuel choices in the long term, but also operational costs in the short to mid-term.
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