Recent developments in Fuel EU Maritime proposal

On 2 June 2022 the European transport ministers adopted a "general approach" to the FuelEU Maritime proposal. This marked an important step in the legislative process. Although some provisions have been proposed changed, the proposed scope of the regulation (both geographical and with respect to the type of vessels that the regulation will apply to) has been kept the same.

After being proposed by the European Commission in June 2021 (for further details please see "Key aspects of FuelEU Maritime proposal"), the Fuel EU Maritime regulation has been the subject of much debate. Some stakeholders have highlighted that a global approach is necessary to tackle greenhouse gas emissions from the shipping sector, and that the Fuel EU Maritime proposal should be harmonised with the work being done at the International Maritime Organization. Others, including the European Community of Shipowners' Associations have argued that fuel suppliers should be added to the regulation, and that revenues generated under the FuelEU Maritime regulations (and the EU Emissions Trading System) should be earmarked to facilitate the energy transition.

Although it still remains to be seen whether the proposal will be adopted, and if so in what form, an important step in the legislative process was made on 2 June 2022, when the European transport ministers adopted a "general approach" to the Fuel EU Maritime proposal. In this general approach, the originally proposed scope of the regulation has not been changed. This means that the regulation has the same geographical scope and that it applies to the same vessels as originally proposed. In addition, the targets for reducing the greenhouse gas intensity of energy used on board ships have been maintained (not increased). Rules relating to certification of fuels, as well as governance, including the penalties to be applied in the event of non-compliance, have also broadly been kept the same.

The general approach does also propose some amendments. Among others, the provisions on the role of companies, verifiers and the public authorities, and on the monitoring, reporting and verification procedures, have been clarified and strengthened. Furthermore, provisions on calculating greenhouse gas intensity and the resulting penalties and fines have been revised with a view to clarifying their scope and to prevent circumvention. Interestingly, quite a few temporary provisions have also been added to the regulation, primarily to take specific concerns and conditions of member states into account. Other provisions, which apply to transhipment ports for container vessels, and which were not included in the Commission proposal, have also been added in order to to limit carbon leakage.

Stakeholders should follow the legislative process closely and prepare for new requirements. The focus on decarbonisation and the transition to alternative low and zero-emission fuels and energy carriers has continued to increase, and it seems clear that the shipping sector needs to prepare for additional regulations.

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