Authored by Antonia Panayides and Alexander Drury.

Welcome back to another FuelEU Friday post. This week, we are looking at how the FuelEU Maritime Regulation works.

How does FuelEU reduce emissions?

The Regulation sets a limit on the greenhouse gas emissions created by burning fuel, measured as the equivalent grams of CO₂ emitted. The allowed emissions will gradually reduce over the coming years, encouraging vessels to use cleaner fuels that pollute less.

The limit on emissions will be reduced as follows:

1. 2% from 01 January 2025;
2. 6% from 01 January 2030;
3. 14.5% from 01 January 2035;
4. 31% from 01 January 2040;
5. 62% from 01 January 2045; and
6. 80% from 01 January 2050.

Each fuel will be graded with its own emissions profile. While EU ETS considers emissions on a tank-to-wake basis, FuelEU considers well-to-wake emissions. This will provide a more complete picture of the environmental impact of the fuels.

When does monitoring start?

The first reporting period starts on 1 January 2025. Each reporting period lasts for one calendar year. During the reporting period, companies must record the type and quantity of fuel burnt on a relevant voyage or at port, along with their time of arrival and departure from each port and more. This information must be submitted to a verifier by 31 January the following year.

What happens next?

By 31 March, the appointed verifier will assess the information submitted and inform the company of the vessel’s compliance balance, i.e. the vessel’s over or under compliance with reference to the limits. The company must then consider how to achieve compliance. We will look at compliance options next week.

Why comply?

Compliant ships receive a FuelEU document of compliance. The FuelEU document of compliance is valid within the EEA for 18 months, or until a new FuelEU document of compliance is issued, whichever is earlier. Meanwhile, persistently non-compliant vessels may face a range of penalties, including an expulsion order.

Next week, we will turn to how vessels can seek to reach compliance. In the meantime, please do reach out if you have any questions.