The upcoming FuelEU Maritime regulation goes beyond just data recording and reporting. It requires an overarching multi-faceted approach to achieve and maintain compliance. Multiple maritime stakeholders must manage responsibilities, assess compliance status, and carefully plan their compliance actions throughout the year.
In this week’s newsletter, we break down step-by-step what is required to master compliance with the upcoming FuelEU Maritime Regulation successfully.
Align Stakeholder Responsibilities
While the ISM company is ultimately responsible for compliance with FuelEU, it is expected that individual contractual agreements will pass on responsibility for achieving compliance to other parties. Define with your respective counterparties (owners, charterers, and/or managers) how to handle GHG intensity tracking, reporting, and surplus management. Special emphasis must be laid on the compliance mechanisms, most importantly on the ownership of surplus as it is critical for external/internal pooling and banking.
Assess and Track Compliance Status
Regularly assess each vessel’s and the fleet’s GHG intensity relative to the FuelEU targets to ensure end-of-year compliance. Make use of simulation tools to project how your compliance status may evolve throughout the year, considering factors like fuel changes, voyage patterns, and price data.
Develop a Compliance Strategy
Define a strategy based on your fleet’s projected end-of-year compliance status. If your fleet will have a deficit (non-compliance), decide whether to:
Pay the penalty.
Purchase alternative fuels.
Borrow from the following year’s compliance balance.
Buy surplus by entering an external pool.
If your fleet will have a surplus (over-compliance), decide whether to:
Bank the surplus for future use.
Use it for internal pooling within your fleet.
Sell the surplus to other companies.
Option: Source Alternative Fuels
Consider the technical capabilities of your vessels, their routes, the corresponding alternative fuel availability, and the correct fuel certification for eligibility under FuelEU. To prevent extra costs, calculate the exact amount of alternative fuel needed by considering the intricacies of the FuelEU regulation, especially the fuel allocation across different voyages.
Option: Manage External Pooling and Surplus Trading
External pools are both particularly appealing as they save compliance costs for non-compliant companies and allow for additional revenues for over-compliant companies, but must also be looked at with caution. To ensure risk-managed, trustworthy, and reliable external pooling, several key points must be considered:
KYC and Partner Selection: Ensure thorough Know Your Customer (KYC) processes and select reliable partners.
Data Accuracy: Request pre-validated data when trading before the annual data verification to reduce the risk of non-delivery.
Contractual Agreement: Set up contracts that cautiously define price, amount, timelines, responsibilities, and most importantly risk management (e.g. reimbursement structure in case of non-delivery).
Control over sold surplus: Make sure to maintain control over sold surplus not allowing buyers to further sell surplus to other companies to prevent stakeholder chaos and contractual confusion.
Report and Verify Compliance Data and Mechanisms
Ensure that all relevant (EU MRV) data, including surplus and deficit calculations, is submitted to a verifier on time. Make sure to also report compliance mechanisms, including the use of surpluses, deficits, and penalties, as required by FuelEU Maritime regulations.
We can Help with Your Successful Step-By-Step FuelEU Maritime Compliance Approach
Successful FuelEU Maritime compliance is not just about meeting regulatory requirements; it's about aligning with stakeholders, strategically managing your compliance options, and knowing the intricacies of the new compliance mechanisms. BetterSea’s FuelEU Platform navigates all these steps for you and streamlines the process end-to-end.
Stay tuned for more insights on navigating these complex challenges in our upcoming newsletters. If you have any questions or need further guidance on the required steps, feel free to reach out!
Best regards,
The BetterSea Team
Contact Us: info@bettersea.tech
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