The Impact of FuelEU Maritime Regulation on Shipping Industry

As of 1 January 2025, voyages involving port calls in the European Union will be subject to the new FuelEU Maritime regulation. This regulation aims to boost the adoption of renewable and low-carbon fuels in maritime transport to significantly reduce onboard greenhouse gas emissions in Europe.

FuelEU Maritime represents the latest effort to steer the shipping industry towards decarbonization. However, the landscape of emissions regulations is becoming more intricate and region-specific. With a multitude of new rules, tightening targets, and looming deadlines, the need for reliable data and insights to guide decision-making has never been more crucial. Additionally, these regulations may not always account for the diverse trade patterns or vessel types, leading to ambiguity and increased challenges for the shipping sector.

To help shipowners grasp the financial and commercial implications of compliance with the new regulation, the Baltic Exchange has introduced a free FuelEU Maritime calculator.

“While emissions regulations bring positive outcomes for the industry, there is a level of uncertainty regarding what constitutes strong commercial performance in this evolving scenario. When the financial penalties and alternative fuel options come into play, the stakes become real. What is imperative at this point is a clearer understanding of how various regulations will impact the operational decisions of shipowners,” stated Martin Crawford-Brunt, emissions lead at the Baltic Exchange.

Released in advance of the regulation’s enforcement, the Baltic Exchange’s Emissions Calculator now features a dedicated FuelEU Maritime component. This tool allows shipowners to assess the potential cost implications for their vessels, aiding operators and charterers in evaluating fair charges.

The calculator offers a crucial comparison of a vessel’s journey and fuel consumption, contrasting standard low sulfur heavy fuel oil with greener alternatives like LNG or methanol. By inputting the vessel’s deadweight tonnage, type, speed, and consumption against Baltic standard ship data, shipowners can swiftly gauge the potential financial ramifications of operating their vessel on voyages involving EU port calls. This empowers them to factor in these added costs into the freight cost or target time charter rate.

Currently, the calculator only includes fossil-based variants of alternative fuels, as they are expected to be more competitively priced and available sooner than green alternatives. Future updates will incorporate bio-fuel blends for diesel and LNG with known well-to-wake factors.

For instance, a 50,000 dwt MR tanker on the TC14 Baltic route (Houston – Amsterdam), facing VLSFO at $600 per tonne and MGO at $700 per tonne, would encounter approximately $483,000 in fuel costs and a FuelEU Maritime penalty of $29,400 in 2025.

Moreover, the calculator enables users to swiftly assess the associated costs if the vessel were to run on LNG, methanol, or ammonia. Using default fuel price inputs of LNG at $750 per tonne, methanol at $1,500 per tonne, and ammonia at $1,200 per tonne, users can easily modify the fuel prices.