This week, we’re providing a guide on how to calculate the FuelEU Maritime penalties. We will go through each required step.
General Overview of FuelEU Maritime Regulation
The FuelEU Maritime Regulation aims to reduce the maritime sector's greenhouse gas (GHG) emissions, targeting a 6% reduction by 2030 and 80% by 2050. The regulation mandates stricter emissions reporting and compliance with GHG intensity limits for ships operating to/from or within the EU, promoting the use of cleaner fuels and innovative technologies to drive sustainability.
The Compliance Penalty
The FuelEU Maritime Regulation includes a strict compliance penalty that is applied if the target GHG intensity is not met. The penalty costs have cautiously been chosen to ensure that a strategy of just paying the penalty is commercially not attractive.
"Without prejudice to the possibility of complying through the flexibility and pooling provisions, ships that do not meet the limits on the yearly average GHG intensity of the energy used on board should be subject to a penalty that has dissuasive effect, is proportionate to the extent of the non-compliance and removes any economic advantage of non-compliance, thus preserving a level playing field in the sector (the ‘FuelEU penalty’). The FuelEU penalty should be based on the amount and cost of renewable and low-carbon fuels that the ships should have used to meet the requirements of this Regulation." as per FuelEU Maritime Regulation (EU) 2023/1805.
The penalty is set at 2400€ per ton of VLSFO equivalent exceeding the limit, but what does that mean for a vessel in total?
How to calculate FuelEU Maritime Penalties?
Step 1: Calculate the GHG intensity
Required data:
Fuel consumption per fuel type (in g fuel)
Tank-to-Wake (TtW) emission factor per fuel type (in g CO2e / MJ)
Well-to-Tank (WtT) emission factor per fuel type (in g CO2e / MJ)
Lower calorific value (LCV) per fuel type (in MJ / g fuel)
Electricity consumption (in MJ)
The lower calorific value can be found in Annex II of the FuelEU Maritime Regulation (EU) 2023/1805, the emission factors can be found in the same Annex or the fuel's Proof of Sustainability (PoS).
Equation:
Fuel consumption * LCV * (TtW Emission Factor + WtT Emission Factor)
Fuel consumption * LCV + Electricity consumption
Note: For LNG, RFNBOs, ice class, or wind propulsion, please consult the FuelEU Maritime Regulation (EU) 2023/1805 for more detailed information.
Step 2: Calculate the Compliance Balance
Required data:
Actual GHG intensity (in g CO2e / MJ)
Target GHG intensity (in g CO2e / MJ)
Fuel consumption per fuel type (in g fuel)
Lower calorific value (LCV) per fuel type (in MJ / g fuel)
Electricity consumption (in MJ)
The lower calorific value can be found in Annex II of the FuelEU Maritime Regulation (EU) 2023/1805, the actual GHG intensity has been calculated under Step 1, and the target GHG intensity is 89.34 g CO2e / MJ as per Article 4(2) of the FuelEU Maritime Regulation (EU) 2023/1805.
Equation:
(Target GHG intensity - Actual GHG intensity) * (Fuel consumption * LCV + Electricity consumption)
Step 3: Calculate the Compliance Penalty
Required data:
Actual GHG intensity (in g CO2e / MJ)
Compliance balance (in g CO2e)
The actual GHG intensity has been calculated under Step 1, the compliance balance has been calculated under Step 2.
Equation:
Compliance balance (absolute value) * 2400 €
Actual GHG intensity * 41,000 (MJ)
This step-wise approach helps calculate the FuelEU Maritime penalties and breaks down the complex equations in a more simple manner. Note that the above has been simplified to exclude the use of LNG, RFNBOs, wind propulsion, or an ice class. In case any of the above is relevant, please refer to the annexes of the FuelEU Maritime Regulation (EU) 2023/1805 for further information.
If you want to read through an example case of a 15,000 TEU container ship, check out our recent case study!
Stay tuned for more insights and case studies in our upcoming newsletters. Together, we can navigate the path to maritime decarbonization.
Feel free to reach out if you have any further questions or are interested in learning more about how BetterSea's streamlined and end-to-end FuelEU software solution can help achieve cost-efficient and effortless compliance.
Best regards,
BetterSea Team
Contact Us: info@bettersea.tech
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