Insights

Regulation (EU) 2023/1805 of the European Parliament and of the Council of 13 September 2023 on the use of renewable and low-carbon fuels in maritime transport and amending Directive 2009/16/EC (the “FuelEU Maritime Regulation”) aims to foster fair competition and boost the use of renewable and low-carbon fuels in maritime transport by imposing limits on greenhouse gas (GHG) emissions from ships without mandating specific fuels or technologies. The Fuel Maritime Regulation will be fully applicable from 1 January 2025, however, certain articles will be applicable as of 31 August 2024, all of which concern the modifying and submitting of monitoring plans. By setting uniform rules across the EU, the regulation creates a level playing field for all maritime operators, preventing competitive disadvantages and encouraging fair market practices.

The scope of the FuelEU Maritime Regulation applies to all ships above 5,000 gross tonnage (GT) that serve the purpose of transporting passengers or cargo for commercial purposes, regardless of their flag in respect of:

• the energy used during their stay within a port of a call under the jurisdiction of a Member State (MS);
• the entirety of the energy used on voyages from a port of call under the jurisdiction of a MS to a port of call under the jurisdiction of a MS;
• half of the energy used on voyages arriving at or departing from a port of call located in an outermost region under the jurisdiction of a MS; and
• half of the energy used on voyages arriving at or departing from a port of call under the jurisdiction of a MS, where the previous or next port of call is under the jurisdiction of a third party.

Article 2(7) dictates that the regulation does not apply to specific vessel types, such as warships, naval auxiliaries, fish-catching or processing ships, wooden ships of primitive build, non-mechanically propelled ships, and government ships used for non-commercial purposes. The FuelEU Maritime Regulation also lays out the yearly average GHG intensity of the energy used on board by a ship during a reporting period which shall not exceed the following limits:

• 2% from 01.01.2025
• 6% from 01.01.2030
• 5% from 01.01.2035
• 31% from 01.01.2040
• 62% from 01.01.2045
• 80% from 01.01.2050

As referenced within Regulation (EU) 2023/1804 of the European Parliament and of the Council of 13 September 2023 on the deployment of alternative fuels infrastructure, and repealing Directive 2014/94/EU, the FuelEU Maritime Regulation mandates the use of on-shore power supply (OPS) or zero-emission technology while ships are docked in ports. OPS is an alternative maritime power source which refers to the provision of electrical power to a docked vessel which allows it to shut down its engines and generators which are typically used to power the ship’s systems, such as lighting, heating, cooling, and other electrical needs, thus resulting in reduced emissions, noise reduction and fuel savings. By 2030, ports must ensure that at least 90% of eligible ships connect to OPS.

Preparations for the implementation of this new introduction to maritime industry have already begun, even locally. The addition of Shore-to-Ship technology has been launched at the Grand Harbour, whereby this technology allows up to five docked cruise liners to plug into Malta’s electric grid, the effects of which are projected to result in a 90% reduction in pollution for the approximately 17,000 residents around the Grand Harbour by 2030. Currently, only one-third of the cruise ships at the Valletta Cruise Port are equipped with OPS, but many are being retrofitted to be OPS-ready by end of year.

The FuelEU Maritime Regulation supports its own enforcement by also amending Directive 2009/16/EC of the European Parliament and of the Council of 23 April 2009 on port State control, whereby it ensures that inspections of ships not only check for safety and environmental standards but also verify compliance with the renewable and low-carbon fuel requirements.

As mentioned beforehand, certain provisions of the FuelEU Maritime Regulation will come into force later this year. Shipping companies must develop and submit a monitoring plan by 31 August 2024, for each of their ships and shall also submit a monitoring plan to the verifier without delay whereby this plan should include comprehensive documentation, such as ship identification, company contact details, energy conversion systems, OPS connection standards and procedures for monitoring fuel consumption and voyage data.

Starting 1 January 2025, companies must begin annually monitoring and recording essential data for each of their ships, including the amount of each type of fuel consumed and the emission factors for all relevant greenhouse gases. By 31 January of each verification period, companies must submit a ship-specific FuelEU report to the verifier, detailing all relevant data for the reporting period whereby independent verifiers will assess the accuracy and reliability of the data reported by shipping companies.

Once again, Malta is ensuring that shipowners, operators, managers and all relevant organisations and individuals are made aware of the obligations of the FuelEU Maritime Regulation through the publishing of its MS Notice 188. By means of this notice, Transport Malta is not only making the maritime community aware of the regulation, but also of its obligations in the years to come. For example, by 30 June 2026, and annually thereafter, the verifier will issue a FuelEU Document of Compliance for ships that have no GHG intensity compliance deficits or non-compliant port calls. This document must be held by ships as proof of compliance with the Regulation. If a ship has a compliance deficit, a FuelEU penalty, calculated by the verifier according to the Regulation’s formula, will be imposed.

Member States are responsible for enforcing compliance through inspections and sanctions as indicated in the FuelEU Maritime Regulation, which mandates that penalties for non-compliance must be effective, proportionate and dissuasive whereby Member States must notify the European Commission of their enforcement measures and any subsequent amendments.

This regulation acknowledges the importance of stakeholder input, requiring consultations with relevant parties, including port authorities and industry representatives, to ensure practical and effective implementation. It is a significant step towards reducing the maritime industry’s environmental footprint by promoting environmentally-friendly practices along with the use of renewable and low-carbon fuels. By setting uniform and harmonised rules and fostering innovation without prescribing specific technologies, the regulation ensures fair competition, encourages innovative and sustainable practices and also supports the EU’s long-term climate goals.

Ms. Martina Naudi (Legal Intern) contributed to the researching and drafting of this article