Shipping | “Fit for 55”: Provisional agreement reached on FuelEU Maritime Initiative

Background

The EU has set an ambition to be climate-neutral by 2050 – an economy with net-zero greenhouse gas emissions. This objective is at the heart of the “European Green Deal” and in line with the EU’s commitment to global climate action under the Paris Agreement. The European Green Deal was presented by the European Commission December 2019.

As part of the European Green Deal, the European Commission has set a target of greenhouse gas emissions in 2030 to 55% compared to 1990. The European Climate Law sets out in binding legislation the EU’s commitment to climate neutrality and the intermediate target of reducing net greenhouse gas emissions by 2030.

In order to reach such target – the European Commission has considered actions required across all sectors – which has led to several legislative proposals – including the FuelEU Maritime Initiative.

The European Parliament adopted the FuelEU Maritime Initiative on 19 October 2022. On 23 March 2023, the European Parliament and Council reached a provisional agreement on the FuelEU Maritime Initiative regulation.

Regulation

The FuelEU Maritime regulation (i) sets a maximum limit on the greenhouse gas intensity of energy used on-board by a vessel arriving at, staying within or departing from ports in the EU and (ii) contains certain obligations to use on-shore power supply or zero-emission technology in ports in the EU.

Maximum limit on the greenhouse gas intensity of energy used onboard by a vessel

The maximum limit on the greenhouse gas intensity of energy used onboard by a vessel will apply to all vessels above a gross tonnage of 5000, regardless of their flag.

The targets shall be determined against a reference value reflecting the fleet average greenhouse gas intensity of energy used onboard by vessels in 2020 and reduced by the following percentages:

–  2% by 2025

–  6% by 2030

–  14.5% by 2035

–  31% by 2040

–  62% by 2045

–  80% by 2050

The regulation applies to (i) 50% of the energy used by a vessel performing voyages arriving at a port in EU from a port outside of EU or EU outermost regions, (ii) 50% of the energy used by a vessel performing voyages departing from a port in EU and arriving at a port outside the EU or EU outermost regions, (iii) 100% of the energy used by a vessel performing voyages between EU ports, and (iv) 100% of the energy used at berth in a port in EU.

The regulation shall be reviewed by the European Commission by 2028 to decide whether to extend emission-cutting requirements to smaller vessels or to increase the share of the energy used by vessels coming from non-EU countries.

Obligation to connect to onshore power supply or zero-emission technology in ports in the EU

Passenger and container vessels are as a main rule required to connect to onshore power supply from 2030 unless they can demonstrate the use of another zero-emission technology. This will apply to Trans-European Transport Network (TEN-T) ports from 2030, and other EU ports from 2035 if these ports have on-shore power supply.

The FuelEU regulation is combined with the Alternative Fuels Infrastructure Regulation and the Trans-European Transport Network (TEN-T) to align the regulation with the development of the infrastructure for alternative fuels in the EU. This includes ensuring that the requirements to the vessels are supported by adequate recharging and refueling infrastructure. TEN-T maritime ports will, therefore, be required to install electricity supply to serve the demand of at least 90% of container and passenger vessels calling at that port. Onshore side electricity installation must be provided at every TEN-T inland waterway port. This will ensure that vessels have access to electricity supply in major ports.

Renewable and low-carbon fuels in maritime transport

The regulations gives incentive, in the form of offsetting emissions to those vessel owners who use renewable fuels of non-biological origin (RFNBO) from 2025 to 2034. The regulations also set a 2% renewable fuels usage target as of 2034 if the European Commission reports that in 2031 RFNBO amount to less than 1% in fuel mix.

The way forward

The regulations must now be approved the Parliament and Council before the regulations come into force.

BAHR’s View

The FuelEU Maritime Regulation is a step towards the ambition of EU that the maritime sector shall contribute to the EU climate targets. This legislation will have a direct and important impact on the maritime sector.

The agreement is a clear indication of the EUs focus on decarbonization and the contribution by the maritime sector to reach the overall climate targets.

Further details on the FuelEU Maritime Regulation are available here.

Do not hesitate to contact any of BAHR’s shipping team members for further information.