Overdoing it, and cashing in

Maritime data and technology firm OceanScore says it has identified tangible savings on the cost of compliance with FuelEU Maritime that can be made through burning biofuels to generate surpluses for vessel pooling and through financial gains from over compliance with carbon intensity reduction targets.

“While many shipping companies are struggling to get to grips with the complexities of this new regulation, it also presents significant commercial and revenue opportunities for those that understand FuelEU and are taking a proactive approach to adoption of alternative fuels,” says the company’s managing director Albrecht Grell.

He states it is natural for the industry to take a defensive stance towards the regulation, with many players focused on technical aspects such as finalising monitoring plans, data provision and verification, while seeking clarity on charter parties and Bimco’s Shipman clauses as they relate to FuelEU.

According to Grell the issue is compounded by the tight time-frame ahead of implementation on 1 January 2025 and the fact it is being introduced when shipping is still trying to gain control of the EU ETS, amid ongoing operational challenges due to geopolitical developments.

Grell says FuelEU “can understandably be seen as annoyingly complex and just another cost burden for shipping”, with players facing a hefty penalty of €2400 per tonne of VLSFOe for compliance deficits and the prospect of increasing costs if no action is taken as intensity reduction targets are tightened towards 2050.

However, he also highlights business opportunities arising from the concept of surpluses and deficits under the FuelEU pooling mechanism whereby over compliance for vessels using alternative fuels can be used to offset compliance deficits of other units running on conventional fuels to create a neutral compliance balance – both for internal fleets and with vessels from third parties.

Explaining the two key drivers for these opportunities, Grell says: “Generating compliance surpluses through burning the right biofuels will be much cheaper than paying penalties. And if sufficient compliance surpluses are generated, these can be ‘sold’ via FuelEU pooling arrangements with others.”

OceanScore has calculated the net value of surpluses generated by replacing for example HFO with rapeseed-based biofuel will be around €440 per tonne of HFO replaced, taking into account the different bunker prices and calorific values of these fuels, as well as FuelEU penalties and EU ETS costs.