At a recent webinar hosted by Bureau Veritas Marine & Offshore and OrbitMI Inc., Eleni Chavredaki from the Maritime Carbon Solutions Team, shared insights into the commercial and operational shifts expected as the FuelEU Maritime regulation takes effect.
The maritime sector is facing a major new regulatory change with the impending implementation of the FuelEU Maritime directive, effective from January 2025. A recent webinar hosted by Bureau Veritas Marine & Offshore and OrbitMI Inc., highlighted the industry's proactive strategies to adapt to these changes. Eleni Chavredaki from Maritime Carbon Solutions (MCS) and the IFCHOR GALBRAITHS’ Sustainability Team, alongside strategic partners, shared insights into the commercial and operational shifts expected as the regulation takes effect.
A key adaptation strategy discussed involves the contractual handling of FuelEU costs. Based on BIMCO’s clause for time charter parties and a few private wordings more recently circulated, the preferred route for passing the FuelEU cost through the charter party (C/P) chain is expected to be via requesting charterers to supply compliant fuels such as biofuel blends for 10-30% of the fuel used on voyages calling Europe, in line with the bunker specification clause agreed in C/Ps. The supply of non-compliant fuels would lead charterers to bear the penalty costs. Whichever the measure, accurate verified emissions data will be crucial for stakeholders when agreeing on contractual arrangements and associated costs.
MCS plays a critical role by doing just that. As part of the Orbit interface, MCS provides users across the c/p chain with precise estimates and real-time information on GHG shipping emissions, in terms of absolute emissions, and intensity of emissions. On FuelEU cost monitoring and reporting, all partners collaborated closely to develop the new Bunkers report in the Orbit Reporter. Incorporating the option to upload ‘bunker delivery notes’ (BDNs) as attachments in Bunkers reports and directly in the system’s vessel performance analytics tool was at the centre of our discussions. This is very important to understand the origin and carbon intensities of the fuel being burnt, especially so for biofuels, with the view of storing this information in the system and cross referencing the specifics of the bunker grades with those originally reported by the Master, to prepare the FuelEU Monitoring plan for submission.
During the webinar, concerns were raised about the practical challenges of integrating biofuels, which are seen as a key component for compliance in the near to medium term. Namely, fuel segregation, as different grades of biofuels cannot be mixed, either with each other or with conventional fuels, necessitating separate fuel tanks. Additionally, as biofuels are less stable than heavy fuel oils, concerns are raised about fuel degradation, engine compatibility, and possible long-term damage to main engines. In response, standardised clauses and certifications are being developed to ensure the quality and sustainability credentials of supplied biofuels.
While the maritime industry continues to focus on EU-ETS as its impact becomes more tangible with 70% emissions surrender rate in 2025, discussions around what additional bunker data to collect, and how to price one’s exposure to FuelEU Maritime are now coming into the line of focus. Stakeholders’ needs are becoming increasingly more sophisticated. MCS has been designed to assist shipping players manage easily their exposure to remain competitive as environmental regulations become more stringent.
The webinar concluded with a focus on the readiness of different market players for the upcoming regulation. While many claim to be prepared, especially those holding the Document of Compliance acting on behalf of shipowners needing already to have met preliminary technical requirements, the real test will come in the operational and commercial readiness of stakeholders across the whole supply chain to implement these changes effectively.