“FuelEU Maritime is a monster”

Dear Readers,

EU ETS has not yet been fully rolled out - the submission of EU allowances will be required for the first time in the 3rd quarter 2025 - and the next environmental regulation of the European Union is already just around the corner. And this really packs a punch. Anyone who believes that EU ETS is cost- and labour-intensive should be prepared for much more with the forthcoming FuelEU Maritime. Because FuelEU Maritime is a monster. The new EU regulation aimed at reducing GHG intensity will demand even greater compliance and administrative efforts compared to EU ETS.

Although there are less than three months until FuelEU Maritime will scrutinise the fuel consumption of each of our vessels calling at EU ports, there are still no standard charter party and ship management agreement clauses regulating the compliance obligations between charterers, owners and ship managers. Furthermore, there are many unresolved challenges and uncertainties; to name only one, compliance pools always span one calendar year and do not follow commercial agreements, necessitating the need for complex agreements when pooling rights are transferred.

As a matter of course, BSM took all the necessary measures at an early stage to fulfil all compliance monitoring requirements and offer value added services which are explained in more detail in the article “On track with FuelEU Maritime integration”. We were ready for CII and EEXI, we are ready for EU ETS, and we will also be ready for FuelEU Maritime. We will offer expert advice and guidance, helping our customers navigate the regulatory complexities in the most efficient way. We will also be ready for anything else that comes our way, and there is no doubt that there is much more to come.

Other countries such as the US, the UK and Turkey are also working on similar regulations. The emphasis is on similar, not the same, because as always, the devil will be in the detail. Not forgetting the MEPC82 meeting of the IMO and its member states at the beginning of October. Various options for GHG pricing mechanism along with a fuel standard were discussed with limited progress to design concrete emission reduction measures.

It is expected that states will finalise mid-term measures at the next MEPC meeting in April 2025 and then adopt these at an extraordinary MEPC in autumn 2025. The introduction of such global mechanisms is expected in 2027. Whatever the agreement will look like, there is little chance that it will replace the existing or future regional regulations but will come on top of them.

That means: more complexity and even more administrative burden and bureaucracy. We are increasingly becoming data managers focussing on monitoring and reporting. While BSM, as a large ship manager with a strong focus on digitalisation and fleet performance, can manage this, it is hardly feasible for smaller shipping companies and managers.

I think that shipping is aware of its responsibility in combating climate change and is ready to do its part. However, the creation of a convoluted set of regulations, diverse data collection and reporting requirements, and various responsibilities does not help anyone, not the shipping industry, not the regulatory authorities and not the climate. If you have a common goal, you should also agree on a common framework. Just think of the development of container shipping, where a standard has been achieved on a global scale. Today, 20 feet is the measure of all things. This has revolutionised global logistics and made it much more efficient.

We fully support the overarching goal to protect our climate. However, even if we are undoubtedly capable to managing the complexity of the new requirements, greater alignment between these regulations would enhance efficiency and drive more effective outcomes, to the benefit of everyone.

Yours,

Ian Beveridge