A welcome KISS to Fuel EU Maritime.
The #FuelEUMaritime (FEUM) kicks in January 1st, adding a new layer of complexity for Ship Owners and Operators. What does it mean to your business and how can you adapt commercially?
A Strategy professor at business school taught me that for a system to work, you need to apply the KISS principle (apparently originating from the US Navy); "Keep It Simple Stupid!". FEUM is far from simple, so I will try to break it down to its core parts.
⚙️ First, FEUM introduces practical challenges.
You have already submitted the FEUM monitoring plans for all your vessels. That was easy – basically a copy of the EU MRV monitoring plans, and quite generic. The hard part now starts by living up to the commitments made in the submitted plan:
● Are you collecting all requires data points needed? At the correct time for the correct event? We see a lot of lacking reporting at All Fast and Cast Off, for instance.
● Is the collected data complete? Accurate? Valid? If the data collection system allows inconsistent input and typos, then inconsistencies and typos are inevitable.
● Do you have the right documentation? We see BDNs lacking required data and level of details to calculate the biofuels unique metric. If you don’t get this right your expensive bioblends will be treated as if conventional fossil fuel.
● Are you getting the calculations right, embedding the complexity from bioblends?
📜 Second, there are the legal obligations and rights put on Owners.
The s c o p e basically mirrors the EU ETS, but focus on energy (and emissions) from all voyages that start, end or both with a port call loading or discharging in EU/EEA ports.
The m e c h a n i s m. The coming five years each ship needs to deliver a ghg intensity 2% better than for the reference year 2020. These “allowed” ghg emissions are the threshold multiplied with the energy consumed by the vessel. If the vessel’s actuals exceed the “allowed”, there is compliance deficit and penalty.
FEUM peg the euro 2400 penalty 💸 to an VLSFO mt equivalent. The equivalent represents the vessels actual energy use above the threshold, given the vessels actual fuel mix and ghg intensity. Not exactly KISS!
If your ship has DF LNG propulsion, you might be in for a 💰treat as running in gas mode would generate a FEUM a compliance surplus that can be sold. However, do not expect to cash in a full reward of euro 2400 per VLSFO equivalent. More on this in my next post.
FEUM provides Owners various options to c o m p ly. For ships that end 2025 with compliance deficits, you can:
● Pay the penalty
● Postpone for next year’s at 10% interest
● Use a surplus from another vessel in your fleet
● Pooling. Buy a surplus from another Owner
For your vessels ending up with a compliance balance surplus, you can:
● Bank it for later
● Use it for your other vessels
● Sell it to other Owners
🔜 In the next “A welcome KISS to FEUM” post, we put our commercial glasses on!
