The FuelEU Maritime proposed regulation is contained within the EU's 'Fit for 55' legislative package - part of the European Green Deal that seeks to transition the EU economy into a climate-neutral future. As the name suggests, the FuelEU Maritime proposal seeks to reduce greenhouse gas emissions (GHG) in the global maritime industry. Ambitious goals have been set by the proposals with aims of reducing current maritime emission levels by 2% as of 2025; 14.5% by 2035 and as much as 80% by 2050.
The proposed regulation is still under consideration with the respective committees of the European Council and Parliament, although a preliminary deal was reached in March 2023 which is indicative of some of the key proposals to be contained within the regulation.
The regulation is targeted at ships over a gross tonnage of 5,000 with a provision that the EU Commission can review the regulation in 2028 and consider applying it to smaller ships. By 2034, ship fuel should consist of 2% from renewable sources and utilise fuels which produce fewer GHG emissions. Ship owners will be given 'carbon credits' for using renewable fuels, signifying an expansion of the EU Emissions Trading System (ETS) to maritime transport.
The scope of application of the regulations is envisioned to be very broad. Part of the proposals to promote sustainable maritime fuels will create new requirements for ships, regardless of their flag, arriving to or departing from EU ports, by imposing a maximum limit on the greenhouse gas content of the energy they use and making these limits more stringent over time. A distinction is made for voyages between two EU ports and an EU port and non-EU port, with regulations applying to all energy used for intra-EU voyages and 50% of energy used where one port is in the EU.
Significantly, 7% of maritime transport GHG emissions occur when a ship is docked in port and uses its on-board generators to power electrical appliances. Consequently, the regulation proposes that all container and passenger ships will be required to cover 90% their electrical needs using onshore power supply when docked in port. It is envisioned that by 2030, all 'major' EU ports (and by 2035 all EU ports) will be outfitted with facilities to provide onshore electrical power to all docked ships. Exceptions have been made, however, for when a ship docks for less than 2 hours, is equipped with zero-emission technology and those port calls that are caused by unforeseen circumstances/emergencies. These proposals will also apply to inland ports in the EU but likely not as stringently as they will to maritime ports.
Notably, at this stage of the legislative process, no penalties have been suggested for noncompliance although it can be expected that these will be added after the current committee stage.
Similarly, the UK Department for Transport has considered similar proposals. In a consultative paper released in July 2022, similar policy proposals were suggested for how the UK could reduce maritime GHG remissions which bear resemblance to the FuelEU Maritime regulation. This includes increasing the provision in UK ports of onshore power facilities, extending the domestic 'UK Emissions Trading Scheme' to domestic maritime shipping and increasing regulation to promote use of renewable fuels in shipping. These proposals are set to be developed upon by the 'Clean Maritime Plan', to be published by the UK Government later in the year, and should broadly align with the proposals in the FuelEU Maritime Regulation. It could then be expected that proposals contained within the 'Clean Maritime Plan' will be given legislative footing sometime in the near future.
Overall, proposals by both the UK Government and EU will likely result in having significant impact on maritime shipping across the continent, with increased regulatory requirements on GHG emissions. Port authorities will also be expected to undertake significant investment to provide on-shore power facilities for docked ships as the transition is made to a net-zero future.