Smaller firms set to take FuelEU hit

According to Albrecht Grell, co-Managing Director of the Hamburg-based maritime technology firm, OceanScore, taking the penalties is a mistake with the fines imposed set to increase substantially in the second and third years whereas understanding the regulation could prove profitable.

Grell could not put a figure how many owners and managers were choosing non-compliance, but he “many of those I have spoken to prefer to simply pay the penalties”.

Speaking at the launch of OceanScore’s new FuelEU management software, Grell urged owners to be compliant rather than pay penalties: “FuelEU is fundamentally different and more complex than ETS, which is a pay as you tax, with FuelEU surpluses can be generated which can lead to financial profits, or deficits which will lead to penalties, it is driven by the choices you make.”

Naval architect Edwin Pang, who worked as a consultant for OceanScore explained that the formula for FuelEU is not only complex, but can also change.

One opportunity the regulation offers for operators to use the banking, borrowing or pooling mechanisms. If you borrow from next year’s carbon balance you will pay 10% interest, however, you can also bank your balance and pooled ships can spread the carbon reduction across an operator’s fleet, pooled ships can bank, but they cannot borrow, explained Pang.

Related:OceanScore sees growing demand in Asia

Using 10% biofuel could offer operators a positive carbon balance and that balance can be sold to other pool members, potentially offering significant savings.

“The FuelEU market allows users to find liquid pooling solutions, the regulation is complex, but owners and managers should not look at the rule as a penalty, but as an opportunity,” claimed Grell.

Demonstrations of OceanScore’s FuelEU software were presented to potential customers, with one heard to comment that the figures that he and his partner had calculated manually, were very similar to the, far more rapid, calculation made by OceanScore’s software.

The system allows the user to add energy solutions, such as wind assisted power, calculate pooling and was considered an efficient tool for the price of €3,000 annual subscription to set up and planning for an entire fleet.

According to Grell compliance comes with three straight forward steps, assessing the business as usual practice, seeing where that can be improved using the FuelEU tool and then “choosing what to do with the remaining compliance balance”.

The alternative, “for a small, modern, container ship with all the bells and whistles for which there are no credits, with a greenhouse gas intensity of 91.67g/megajoule of non-compliant emissions is around $786,000 for a business-as-usual case,” said Grell.

Related:LNG to score well under new FuelEU regulations from 2025