19 September 2023 (Lloyd's List) - THE European Union’s FuelEU Maritime legislation will allow multiple vessels that exceed maximum greenhouse gas intensity levels set from 2025 by creating a pool with vessels that overachieve compliance.

By pooling with overachieving vessels, non-compliant ships can avoid paying penalties as part of the FuelEU Maritime.

FuelEU rules mandate that shipping reduces greenhouse gas intensity for energy used on board a ship by 2% from 2025, 6% from 2030, 14.5% from 2035, 31% from 2040, 62% from 2045 and 80% from 2050. The reduction targets are all set against 2020 levels of 91.16 grams of CO2 equivalent per megajoule.

Calculations based on FuelEU default emissions factors suggest bunkering primarily with very low sulphur fuel oil in intra-EU voyages will not be compliant from 2025, thus resulting in financial penalties for vessels, explained Edwin Pang, founder of maritime consultancy Arcsilea, speaking during the European Shipping Summit being held in Brussels this week.

If vessels continue to use fuels such as VLSFO, marine gasoil or even LNG in a medium-seed engine, their emissions will be higher than the allowed 91.16 grams of CO2 equivalent per megajoule under FuelEU, Pang said, adding that fossil-derived fuels such as grey methanol or grey methanol are also non-compliant.

Bunkering partly with biofuels or renewable fuels of non-biological origin from 2025 could ensure compliance, even if the primary bunker fuel is VLSFO, according to Pang.

Pooling benefits will complement other rewards as part of FuelEU, as it also includes a multiplier of two for vessels using RFNBOs before 2034, meaning if a vessel bunkers with renewable fuels before 2034, its GHG intensity will fall more than vessels using other fuels.

RFNBOs are typically renewable hydrogen-derived fuels such as green methanol and green ammonia among other synthetic products such as e-diesel.

But supply of these fuels is negligible today, thus requiring use of biofuels this decade to comply with FuelEU Maritime before production ramps up.

The EU is also trying to send necessary demand signals for RFNBOs, as it set a 2% sub-target for these products in the maritime bunker fuels from 2034 if the share of these fuels in the bunker mix is less than 1% by 2031.

The FuelEU allows vessels to use their compliance surpluses in other years to reward overachieving vessels.

“In the event there’s a compliance surplus, the company can can save it to the ship’s compliance balance for the following year. On the other side, in the event there is a compliance deficit the company can borrow from the next reporting period,” Pang said.

FuelEU rules complement other EU regulations to ensure use of shore power while moored at quayside.