By Abbas Nazil
The European Union’s FuelEU Maritime regulation came into force, Wednesday, January 1, 2025, imposing a new carbon-intensity mandate on European shipping.
The regulation requires shipowners to make difficult choices regarding fuel efficiency and the adoption of low-carbon propulsion methods.
Under this legislation, shipowners must comply with progressively higher fees on emissions per tonne of transport work for ships over 5,000 GT, with the aim of reducing greenhouse gas intensity in shipping by 80 percent by 2050, compared to 2020 levels.
To achieve this ambitious goal, shipowners must report and track the well-to-wake greenhouse gas intensity of their vessels’ operations.
Non-compliance is still an option, but comes with steep penalties. For emissions that exceed the set limits, operators face a fine of €2,400 per tonne of VLFSO (Very Low Sulfur Fuel Oil) energy equivalent – roughly three times the cost of bunker fuel. The penalty increases for repeated and prolonged noncompliance over multiple years.
There are several pathways to compliance that shipowners can pursue. One option is to pool emissions among a fleet of ships, allowing a low-carbon vessel to compensate for the higher emissions of several older vessels.
Another possibility is to borrow from future years’ compliance to reduce the immediate financial burden, though this must be reconciled in subsequent years.
Alternatively, operators can choose to comply by directly meeting the FuelEU intensity targets. The regulation requires a 2 percent reduction in emissions in the first year, followed by further reductions every five years, ultimately aiming for an 80 percent reduction by 2050.
While FuelEU Maritime is a pioneering initiative in Europe, it has raised concerns about its potential impact on global competitiveness.
Danish Shipping, which represents major European operators like Maersk, Torm, and Stena, has voiced support for the regulation but called for global climate rules for the shipping industry.
The group’s director of environment, Nina Porst, expressed optimism that FuelEU Maritime could help stimulate demand for green fuels in the shipping sector.
However, she also emphasized that the lack of affordable green fuels remains the greatest challenge for the industry’s green transition.
Porst further stressed the importance of global cooperation and urged EU countries to push for international regulations within the International Maritime Organization (IMO) to ensure a level playing field across the global shipping market.
The success of FuelEU Maritime depends not only on European efforts but also on the adoption of comprehensive international rules.
Source: The Maritime Executive