In three weeks shipping will have to come to terms with the single largest slice of new regional legislation for more than a generation. FuelEU Maritime launches January 1 with experts warning the penalties the European Union could dish out could send some companies bankrupt. The rules mandate stringent greenhouse gas (GHG) emission intensity requirements for ships over 5,000 gt transporting cargo or passengers for commercial purposes in the EU. FuelEU Maritime compels shipowners, managers, and charterers to hasten the adoption of renewable and low-carbon fuels in their vessels’ operations. The FuelEU Maritime regulation includes several provisions that incentivise the use of onshore power supplies or alternative zero-emission technologies while ships are at berth. FuelEU doesn’t count all biofuels equally The regulations aim to reduce the carbon intensity of bunker fuels used by ships calling at European Union ports, with a 2% reduction by 2025, followed by an exponential increase every five years – 6% by 2030, 14.5% by 2035, 31% by 2040, 62% by 2045, and 80% by 2050. GHG emissions are calculated from a well-to-wake perspective. In addition to emissions from onboard combustion, this calculation also includes emissions related to the extraction, cultivation, production, and transport of the fuel. The regulation includes provisions for crediting ships using wind-assisted propulsion. “The FuelEU Maritime regulation will significantly impact the shipping industry, even more so than the EU Emissions Trading System (EU ETS),” says Nicholas Fell, chair of BIMCO’s documentary committee. Non-compliance with FuelEU Maritime will mean fines much higher than those incurred from the EU ETS, with a penalty of €2,400 ($2,536) per tonne VLFSO energy equivalent. “The costs involved – for both non-compliance and errors in calculations – could be huge, and will get bigger as time progresses,” says Tor Håkon Svanes, a product manager at Navtor, one a host of tech firms bringing out solutions for the incoming legislation. Beyond the penalties, vessels that are compliant or in surplus open new commercial opportunities via pooling. Pooling will become an important part of the equation for ships heading to Europe. One vessel using a biofuel blend such as B30 would enable overall compliance for a pool with eight other equivalent ships using fuel oil. The global fleet has, on average, spent 17% of the time this year on EU voyages or in EU ports, while 38% of ships 5,000 gt and above have made an EU port call, according to Clarksons Research. Owners coming to Europe will either have to change their fuel mix, join compliance pools or pay up. While the initial mandated GHG reduction of 2% for 2025-2029 might seem small, it is already significant enough to force immediate action. According to DNV, there could be up to seven times more deficit than surplus across the industry when the data for 2025 is finalised. This shows that from year one, the majority of shipowners will have to take some form of action, be it pooling, borrowing, or paying a penalty. Simulations based on NAPA’s performance models and pooling cost estimates released by the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping (MMMCZCS) reveal the scale of the potential costs involved – although exact prices will be set by the market. For example, a typical capesize bulk carrier operating between Brazil and Rotterdam consumes approximately 16,700 tons of fuel annually, considering both VLSFO 380 C