DNV__FuelEU Maritime - Requirements, compliance strategies, and commercial impacts (2024)

FUELEU MARITIME
Requirements, compliance strategies,

and commercial impacts
W H ITE PAP E R
FuelEU MARITIME Project team
Project team
Authors Reviewers
Ola Gundersen Skåre Øyvind Endresen

Tore Longva Håkon Hustad
Øyvind Sekkesæter Helge Hermundsgård
Andreas Gill Hallesen Pål Lande
Jan Kvålsvold
Terje Sverud
2
Content Fuel EU MARITIME
Content
EXECUTIVE SUMMARY 4 3.3.1 Borrowing compliance balance 29
1 INTRODUCTION 6 3.3.2 Banking compliance surpluses 30

3.3.3 Pooling of compliance balance 32
2 OVERVIEW OF REQUIREMENTS 8
3.4 Cost comparison of the
2.1 GHG intensity requirement 9
selected compliance strategies 36
2.1.1 Fuel and emission factors 9
2.1.2 Prioritized allocation of fuels 11 4 COMPLIANCE AND COMMERCIAL IMPACTS 38
2.1.3 Reward factors 12 4.1 Roles and responsibilities 39
2.1.4 Exemptions 12 4.2 Managing compliance 40
2.1.5 Flexibility mechanisms 13 4.2.1 Responsible entity 40
2.1.6 Penalty 14 4.2.2 Administering state and national authority 40
2.2 Shore power requirement 14 4.3 Managing the commercial impact 41
2.3 RFNBO requirement 4.3.1 ISM company 41
(possibly applicable from 1 January 2033) 14 4.3.2 Shipowners and charterers 41
2.4 Monitoring, reporting, and verification 15 4.3.3 Bunker suppliers 44
2.5 Review 15 4.4 Data management in daily operations 45
3 COMPLIANCE STRATEGIES 16 5 STATUS OF IMO REGULATORY

DEVELOPMENT OF GHG 46
3.1 Pay penalty 20
3.2 Use fuels/energy with lower APPENDIX A – INPUT ASSUMPTIONS 48
well-to-wake GHG intensity 22
ENDNOTES49
3.3 Flexibility mechanisms –
borrowing, banking and pooling 29 HOW DNV CAN HELP 51
3
Fuel EU MARITIME Executive Summary
Executive Summary
The forthcoming regulations from the EU and likely the in contracts, the costs may ultimately remain on the
IMO are set to significantly affect the shipping industry, ISM company as the responsible company towards the
imposing substantial costs on vessel owners. This white authorities. The ISM company needs to secure from the
paper gives an overview of the key requirements set shipowner coverage for any cost liabilities related to Fu-
out in the FuelEU Maritime Regulation (Regulation (EU) elEU. For shipowners and charterers, the type of charter
2023/1805), hereafter referred to as ‘FuelEU Maritime’. party contract is significant, as it determines the influence
We also use case studies to illustrate financial implica- each part has on fuel selection and, by extension, the
tions of the regulation, including identification of com- technical and operational control of the FuelEU compli-
pliance strategies to reduce total costs. Moreover, we ance balance by end of the charter party period. Verified
provide an overview of the roles and responsibilities of emissions data is becoming a vital element not only for
key actors in relation to FuelEU Maritime, focusing on compliance but also for maintaining operational and
commercial impacts. Finally, we give the latest status commercial integrity across the maritime value chain.
of IMO regulatory development on greenhouse gases
(GHGs). Status of IMO regulatory development on GHGs
The IMO continues to develop regulations aimed at
Overview of FuelEU Maritime Regulation reducing GHG emissions from international shipping.
FuelEU Maritime, effective from 1 January 2025, estab- As of October 2024, the IMO has agreed on an overar-
lishes stringent GHG emission intensity (gCO2eq/MJ) re- ching structure, the ‘IMO net-zero framework’, for the
quirements for ships over 5,000 GT transporting cargo or needed regulatory amendments in MARPOL Annex VI,
passengers for commercial purposes in the EU/EEA. The expected to be adopted in autumn 2025 and enter into
requirements start with a 2% reduction in GHG intensity force about mid-2027. In case the IMO adopts new re-
from 2025 to 2029, relative to the average GHG inten- quirements, the EU will review the ambitions of the IMO
sity in 2020. This reduction target then increases to 6% regulations and examine if FuelEU Maritime should be
from 2030 to 2034, and further accelerates from 2035 to aligned and to avoid duplication of regulations.
ultimately achieve an 80% reduction by 2050. Shipown-
ers are presented with several flexibility mechanisms to
achieve compliance, including banking, borrowing, and
pooling, and penalty payments.
Financial impact of compliance strategies

The cost implications of FuelEU Maritime are significant,
but our assessments reveal that certain strategies can
effectively reduce these expenses. The option of doing
nothing and paying the penalty is expected to be more We recommend:
expensive than the other compliance strategies. By
comparing the cost implications for an 80,000 DWT bulk
• To start preparing your organization and
carrier case vessel operating in EU waters over 20 years,
we identified several strategies with lower lifetime costs fleet for FuelEU Maritime and identify the
compared to simply blending in bio-MGO in convention-
most optimal compliance strategy.
al engines. These strategies offer, relative to the bio-
MGO strategy, cost savings up to 16%, or 21 MUSD over
• To consider long-term fuel offtake
the lifetime (20 years) of the vessel, underscoring the
importance of selecting the most cost-effective compli- agreements to ensure access to low
ance strategy. Compliance pooling has the potential to
GHG intensity fuels.
be a tool for sharing costs and also helps to trigger a
feasible business case for a vessel utilizing its full green
• To consider energy-efficiency measures
fuel capacity.
to reduce fuel and compliance cost.
Managing commercial impact
Given the potential financial impacts and the opportuni- • To include provisions for FuelEU
ties provided by the flexibility mechanisms, it is important
Maritime in contractual terms and ensure
for each party to understand their potential obligations
and privileges, and how these might affect their commer- access to verified emissions data.
cial and compliance agreements. Unless this is clarified
4
Executive Summary Fuel EU MARITIME
5
Fuel EU MARITIME Introduction
1 Introduction
6
Introduction Fuel EU MARITIME
A complex and evolving regulatory landscape for In this paper, we focus on the EU and the upcoming
greenhouse gas (GHG) emissions from shipping is taking FuelEU Maritime regulation, but also give some insight
shape. Regulations from the EU and the IMO will lead into the ongoing discussions in the IMO. The work builds
to a substantial cost impact for GHG emissions in the on Chapter 7 in our recent Maritime Forecast to 20502
coming years. In the EU, as part of the ‘Fit for 55’1 pack- publication.
age, shipping was included in the EU Emission Trading
System (ETS) in 2024, and in 2025 the FuelEU Maritime The FuelEU Maritime Regulation, taking effect from
regulation is entering into force. To ensure that interna- 1 January 2025, sets well-to-wake GHG emission inten-
tional shipping achieves the ambitions of the 2023 IMO sity requirements for energy used on board ships over
GHG Strategy, the IMO is currently working on the basket 5,000 GT transporting cargo or passengers for com-
of mid-term measures consisting of two parts, a technical mercial purposes in the EU or European Economic Area
element (goal-based fuel standard) and an economic (EEA). Relative to a reference well-to-wake GHG intensity
element (GHG pricing mechanism). These measures are for 2020, the required reduction is 2% (2025), 6% (2030),
scheduled to be adopted in 2025 and enter into force 14.5 % (2035), 31% (2040), 62% (2045), and finally 80%
around mid-2027. (2050). These GHG intensity targets will gradually force
ships sailing into EU/EEA ports to shift fuels, including
Given the long lifespan of ships, shipowners should the adoption of new technologies, with the aim of reduc-
prepare for the introduction of future regulations putting ing GHG emissions.
a cost on emissions as well as limitations on the GHG
intensity of fuels. Both individual ships and fleets need This white paper first gives an overview of the key re-
to prepare for the future, optimizing for the current and quirements set out in the FuelEU Maritime Regulation
future regulatory requirements where emissions will have (Chapter 2). We then use case studies to illustrate finan-
a cost. Having the right tools for navigating in this new and cial implications of the regulation, including identification
complex regulatory era will be important. of compliance strategies to reduce total costs (Chap-
ter 3). Moreover, we provide an overview of the roles
There are also important commercial drivers to be con- and responsibilities of key actors in relation to FuelEU,
sidered, such as expectations from cargo owners (e.g. the focusing on commercial impacts (Chapter 4). Finally, we
Sea Cargo Charter), access to investors and capital (e.g. give the latest status of IMO regulatory development on
Poseidon Principles, ESG reporting, EU Taxonomy), and ac- GHGs (Chapter 5).
celerated development of zero-emission maritime routes
or green shipping corridors (based on the Clydebank
declaration, signed by more than 20 countries).
FIGURE 1-1
The four main chapters in this FuelEU Maritime white paper
Chapter 2 Chapter 3 Chapter 4 Chapter 5

Overview of Compliance Compliance Status of IMO
requirements strategies and commercial regulatory devel-
impacts opment of GHG
©DNV 2024
7
Fuel EU MARITIME Overview of requirements
2 Overview of requirements
CONTENT
• Overview of key FuelEU requirements • The compliance process including the
including: monitoring plan and the milestones during
• GHG intensity and alternative compliance the verification period.
mechanisms
• The main items for inclusion in the 2027
• Shore power
review of the FuelEU Maritime Regulation.
• Potentially in the future, Renewable Fuels
of Non-Biological Origin (RFNBO).
KEY POINTS
• From 2025, ships >5,000 GT transporting • Ships with negative compliance balance after
cargo or passengers for commercial any banking, borrowing, or pooling will have
purposes in the EU/EEA must meet annual to pay a penalty.
well-to-wake GHG emissions intensity
• Each ship must keep a verified plan on board
requirements.
describing the method for monitoring and
• The requirements start with a 2% reduction reporting.
(relative to average GHG intensity in 2020)
• By 31 March each year, a verified report
from 2025 to 2029, 6% from 2030 to 2034,
must be recorded in the FuelEU database
and accelerate from 2035 to reach an 80%
(i.e. Thetis), and by 30 April that year, any
reduction by 2050.
banking, borrowing, or pooling must be
• Only certified sustainable fuels with specified declared.
GHG savings can use actual GHG intensity
• A planned review of FuelEU Maritime by
values for well-to-tank emissions.
31 December 2027 could expand its scope
• FuelEU Maritime offers flexibility mechanisms and may also consider any adopted IMO
– banking, borrowing, pooling – for ships not requirements.
meeting the required GHG intensity, and for
ships doing better than required.
8
Overview of requirements Fuel EU MARITIME
2.1 GHG intensity requirement

From 1 January 2025, ships above 5,000 GT transporting cargo or passengers for commercial purposes in the EU/EEA are
required to meet annual well-to-wake GHG emissions intensity requirements. The GHG intensity is calculated as total GHG
emissions per total energy used (gCO2eq/MJ)3 , as follows:
[ ]
Total GHG emissions [tCO2 eq]
GHG intensity gCO2 eq
MJ = Total energy from fuels [TJ] + Total shore power [TJ] + RewardRFNBO [TJ] × Rewardwind
The GHG emissions are calculated in a well-to-wake per- 2.1.1 Fuel and emission factors
spective for fuels, including emissions related to extraction,
cultivation, production and transportation of the fuel, in Fuels’ potential for reducing GHG emissions vary widely
addition to emissions from combustion or conversion of the in a well-to-wake perspective, depending on the primary
energy, and any methane slip, on board the ship (see Figure energy source, fuel processing, the supply chain, and
2-1). Energy from shore power provided to the ship is also the onboard energy converter. The fuel options for low/
included. In addition, there are reward factors for using zero-emission shipping can be produced from several
certain renewable fuels (RFNBOs – see Section 2.1.1) and primary sources – for example, biofuels from sustainable
for ships with wind-assisted propulsion systems. See Sec- bioenergy sources, electrofuels (e-fuels) from renewable
tion 2.1.3 for more information on the reward factors. electricity, with non-fossil carbon, or nitrogen, and ‘blue’
fuels from reforming natural gas with carbon capture and
The GHG emissions include carbon dioxide (CO2), nitrous storage (CCS) (see Figure 2-3).
oxide (N2O), and methane (CH4), and are calculated as
CO2-equivalents (CO2eq) using the Global Warming Po- FuelEU provides default emission factors and refers to
tential (GWP) over a 100-year horizon (GWP100). The GWP the relevant EU regulations for calculating and docu-
values are currently 25 for CH4 and 298 for N2O.4 menting actual emission factors and sustainability criteria
as shown in Figure 2-3.
The GHG intensity requirement applies to:
FuelEU relies on the methods, criteria and fuel certification
• 100% of energy used on voyages and port calls within the framework of the Renewable Energy Directive6 for biofuels,
EU/EEA Renewable Fuels of non-Biological Origin (RFNBO), and
• 50% of energy used on voyages to or from ports in the Recycled Carbon Fuel (RCF), and on the recast Gas Direc-
outermost regions5 of an EU/EEA member state tive7 for Low Carbon Fuels (LCF). Only sustainable fuels with
• 50% of energy used on voyages into or out of the EU/EEA. an at least 50-65% (non-food or feed crop biofuels) or 70%
(all other fuels) GHG saving compared to a fossil fuel refer-
The required intensity is set relative to the 91.16 gCO2eq ence value (94 gCO2eq/MJ) can use actual certified GHG
per megajoule (MJ) average well-to-wake fuel GHG inten- intensity values for well-to-tank emissions (Figure 2-3). Note
sity of the fleet in 2020. The requirements start with a 2% that the CO2 from biogenic carbon or avoided CO2 emis-
reduction, relative to the average GHG intensity in 2020, sions for RFNBOs and RCFs are deducted as part of the
from 2025 to 2029, increasing to 6% from 2030 to 2034, well-to-tank emissions and included as part of the tank-to-
and accelerating from 2035 to reach an 80% reduction by wake CO2 emissions. In a well-to-wake perspective, the CO2
2050 (see Figure 2-2). emission from combustion or conversion is then neutral.
FIGURE 2-1
Well-to-wake scope used for the GHG emission intensity calculation for fuels
Fuel
bunkering
Extraction/ Processing and Transport and Combustion/

cultivation refining distribution conversion
©DNV 2024
9
©DNV 2024
FIGURE 2-2
FuelEU Maritime GHG intensity requirements from 2025 to 2050. The requirements are given as percentage
reductions (left y-axis) relative to a reference (the GHG intensity in 2020), which provide the absolute GHG
intensity requirements (right y-axis).
Reference = 91.16 gCO2eq/MJ (2020 average)
0 90
89.34 80
Reduction from 2020 reference (%)
20 85.69
70
77.94
60
gCO2eq/MJ
40 62.90
50
40
60
30
34.64
80 20
18.23 10
100 0
2025–2029 2030–2034 2035–2039 2040–2044 2045–2049 2050 ©DNV 2024
Ships using such fuels should ensure that the Bunker De- For tank-to-wake CH4 and N2O emission, the ship can
livery Note (BDN) is accompanied with a Proof of Sustain- use either the default or actual certified emissions fac-
ability (PoS) or similar documentation from the fuel suppli- tors, regardless of the fuel.
er (see Section 4.3.3). If the fuel cannot be documented to
meet the required GHG saving and sustainability criteria it GHG emissions from shore power provided to the ship
will be considered a fossil fuel using the relevant emission are considered zero, regardless of the source of the
factor for the least favourable fossil-fuel pathway. Fossil electricity.
fuels have to use the default well-to-tank GHG and tank-to-
wake CO2 emission factor for the fuel type.
FIGURE 2-3
Fuel definitions and well-to-tank and tank-to-wake emission factors
FIGURE 2-3
Fuel definitions and well-to-tank and tank-to-wake Well-to-tank Tank-to-wake
emission factors GHG CO2 N2O and CH4
Fossil fuels Default factors only

If no: Use least favourable
fossil-fuel pathway
Sustainable and no Default or actual

food and feed crops values certified
Biofuels by means of
GHG saving criteria Yes Actual certified Default factors
laboratory testing
(50–65%) values. Avoided CO2 only
or direct emissions
or from biogenic measurements
carbon deducted.
RFNBO, RCF, GHG saving criteria
LCF (70%) Yes
Shore power Zero emission
RFNBO: Renewable Fuels of Non-Biological Origin; RCF: Recycled Carbon Fuels; LCF: Low Carbon Fuels ©DNV 2024
10
FIGURE 2-4
Prioritized fuel allocation for calculating the total annual GHG intensity. Green boxes indicate fuels with lower GHG
intensity than fossil fuels indicated by the grey boxes
Into EU EU port In EU EU port Out of EU

Voyage Reported Leg 1: Leg 2: Leg 3: Leg 4: Leg 5:
reporting energy use 100 GJ 50 GJ 75 GJ 50 GJ 100 GJ
50% 100% 100% 100% 50%
Energy in scope 50 GJ 50 GJ 75 GJ 50 GJ 50 GJ
Annual fuel Prioritized fuel Leg 1: Leg 5: Leg 2: Leg 3: Leg 4:

intensity allocation 100 GJ 100 GJ 50 GJ 75 GJ 50 GJ
Fuel mix used for calculating the annual Fuels with the
actual GHG intensity for the vessel highest GHG
intensity can be
Low GHG intensity fuel Fossil fuel Total energy in scope excluded
©DNV 2024
2.1.2 Prioritized allocation of fuels as liquefied natural gas (LNG) and liquefied petroleum
gas (LPG).
The EU has clarified that all fuel energy used on voyages
into and out of the EU/EEA can contribute to the total an- Figure 2-4 presents an example of a prioritized fuel allo-
nual GHG intensity, even though only 50% of the energy cation for calculating the total annual GHG intensity. The
is included when determining the total energy in scope. example ship uses 100% biofuel on leg 1 and leg 4, which
This implies a prioritized allocation of fuels, starting with are voyages into and out of the EU, and a fossil fuel on leg
the fuels with the lowest GHG intensity, until the total 2 and leg 4, which are two port calls in the EU, as well as
energy in scope is covered. This includes any renewable, on leg 3, a voyage between two EU ports. The ship can
biogenic and low-carbon fuels, as well as fossil fuels such first allocate the low GHG emission biofuel used on leg 1
11
and leg 5, and then add fossil fuel from other voyages until deduction does not have an end date and can be applied
reaching the total energy amount in scope. The ship then indefinitely.
gets the full advantage of using a low GHG emission biofuel
on voyages into and out of the EU as it would if used on Sailing in ice conditions
voyages within the EU. Ships with ice class IC, IB, IA or IA Super (or equivalent)
can deduct the additional energy used due to sailing in ice
conditions from the annual compliance balance calculation.
This deduction can be applied until 31 December 2034.
2.1.3 Reward factors
Wind-assisted propulsion technology Certain transnational and domestic voyages and voyages
The GHG intensity calculation includes a reward factor related to outermost regions
of 1%, 3%, or 5% for ships equipped with wind-assisted EU/EEA member states may exempt energy used on:
propulsion technologies. The reward factor is based
solely on design criteria using the method developed by • Domestic voyages to and from and port calls on islands
the IMO8 and does not depend on the use of the wind with fewer than 200,000 permanent residents for non-
system. The reward factor does not have an end date and cruise passenger vessels.
can be applied indefinitely. • Voyages between ports in outermost regions and related
port calls.
Renewable Fuels of Non-Biological Origin (RFNBOs) • Transnational voyages under public service obligations
Another reward factor can be applied for ships using RF- or public service contracts to other member states, if the
NBOs, where the energy amount of RFNBOs is calculated member state shares no land border with other member
at twice the energy bunkered. This reward factor applies states.
until 31 December 2033. • Voyages by passenger ships providing maritime transport
services under public service obligations or public service
contracts between their mainland ports and ports under
their jurisdiction located on an island or the cities of Ceuta
2.1.4 Exemptions and Melilla.
Ice class
Ships with ice class IA or IA Super (or equivalent) can de- These exemptions only apply until 31 December 2029
duct 5% of energy use when not sailing in ice conditions and will be published in the Official Journal of the
from the annual compliance balance calculation. This European Union.
12
2.1.5 Flexibility mechanisms

FuelEU offers several alternative compliance mechanisms for ships that do not meet the required GHG intensity. A
central element for these mechanisms is the compliance balance which must be calculated for each ship as part of the
annual reporting. The compliance balance indicates how far the ship is above or below the required GHG intensity in
terms of absolute GHG emissions and can be calculated as follows9:
( [ ] [
Compliance balance [tCO2 eq] = Required GHG intensity gCO2 eq MJ – Actual GHG intensity gCO2 eq MJ ]) × Σ Energy [TJ]
A ship with an actual GHG intensity below the required If a ship that has borrowed compliance balance does not
level will have a positive compliance balance, and a have any voyages or port calls under the scope of FuelEU in
ship with an actual GHG intensity above the required the following reporting period, or is scrapped, the respon-
level will have a negative compliance balance. The alter- sible company must pay a penalty for outstanding compli-
native compliance mechanisms include the option for ance balance.
banking and borrowing compliance balance toward the
following year, and to pool compliance balance with Pooling
other ships. Two or more ships, including from different companies, can
join a compliance pool and re-allocate compliance balance
Banking between the individual ships. This means that even if each
A vessel with a positive compliance balance in a reporting individual ship does not meet the required GHG intensity,
period can bank its surplus for subsequent reporting peri- the ships with a negative compliance balance can rely on
ods. The banked surplus does not expire, meaning that a other ships with positive compliance balance to achieve a
surplus banked in 2025 can be used, for example, in 2040. combined GHG intensity level meeting the GHG intensity
In case of a change of responsible company, the banked requirement (see Figure 2-5).
surplus follows the ship.
A compliance pool must meet the following
Borrowing three criteria:
A vessel with a negative compliance balance in a reporting
period can borrow an advance compliance surplus from the • The total compliance balance of all ships is positive.
following year. The borrowed amount plus an additional • Ships which had a compliance deficit do not have a
10% is deducted from the following period’s compliance higher compliance deficit after the reallocation of the
balance. Borrowing cannot be done in two consecutive re- compliance balance.
porting periods, and the amount cannot exceed more than • Ships which had a compliance surplus do not have
2% of the required GHG intensity multiplied by the annual a compliance deficit after the reallocation of the
energy consumption of the ship. compliance balance.
FIGURE 2-5
Pooling of compliance
BELOW ABOVE
required GHG intensity required GHG intensity
POSITIVE NEGATIVE
POOL
compliance balance compliance balance
SELLS BUYS
compliance balance compliance balance
©DNV 2024
©DNV 2024
13
A ship which has a positive compliance balance after negative compliance balance after pooling, it must pay
reallocation in a pool can bank its surplus to subsequent a penalty. A ship can only join one pool for each annual
periods. A ship joining a pool cannot borrow compli- reporting period.
ance balance from the subsequent period, and if it has a
2.1.6 Penalty
Ships with negative compliance balance after consider- energy use. The non-compliant energy use is calculated
ing any banking, borrowing, or pooling will be required as the compliance deficit divided by the actual GHG in-
to pay a penalty corresponding to its compliance deficit. tensity. The penalty is progressively increased by 10% for
The penalty is set to €2,400 per tonne VLFSO energy each consecutive reporting period in which the ship has
equivalent, or about €58.54 per GJ of non-compliant a compliance deficit. The penalty is calculated as follows:
| Compliance balance | [tCO2 eq] 2,400 [ €/tVLSFOeq] Consecutive periods – 1

Penalty [€] = × (
× 1+ )
Actual GHG intensity [
gCO2 eq
MJ] 41,000 [ MJ/tVLSFOeq] 10
The penalty can also be calculated per tonne GHG in ance, as follows (excluding the penalty for consecutive
compliance deficit by dividing with the compliance bal- periods):
58,537 [ €/TJ]
Penalty per tonne GHG compliance deficit [ €/tCO eq] =
[ ]
2
gCO2 eq
Actual GHG intensity MJ
For liquid fossil fuel with a GHG intensity of around lower actual GHG intensity. The implication is that given a
91 gCO2eq/MJ the penalty is about 643 €/tCO2eq in com- certain amount of low GHG intensity fuel, it is better to use
pliance deficit. just enough for one ship to be fully compliant and pay a
penalty for the other, rather than distributing the fuel and
The calculation method means that the penalty per tonne paying a penalty for both.
GHG in compliance deficit increases exponentially with
2.2 Shore power requirement

From 2030, container ships and passenger ships are Vessels not complying with the shore power or ze-
required to connect to shore power, or use zero-emission ro-emission technology requirement will need to pay a
technologies10, for all electrical power demand when at penalty, which is determined as 1.50 €/kWh multiplied by
berth for more than two hours in a Trans-European Trans- the established total electrical power demand of the ship
port Network (TEN-T)11 core maritime port. From 2035, at berth in kW and by the total number of rounded-up
the requirement applies to all ports where shore power is hours spent at berth in non-compliance, as follows:
available.
Penalty [€] = 1.50 [ €/kWh] × Electrical power demand [kW] × Time at berth not compliant [hours]
The penalty can be calculated for a ship having 100 hours 1.5 €/kWh × 5,000 kW × 100 hours = 750,000 €
of non-compliant port calls as in the following example:
2.3 RFNBO requirement (possibly applicable from 1 January 2033)

The regulation includes a possible additional require- will be triggered if the share of RFNBO in the energy mix
ment on the use of RFNBOs from 1 January 2033, which in the 2031 reporting year is below 1%.
14
2.4 Monitoring, reporting, 2.5 Review

and verification The FuelEU Maritime Regulation will be reviewed by
31 December 2027. In particular, this will address:
Each ship must maintain a verified monitoring plan on
board describing the method for monitoring and reporting
• ship types and sizes in scope – this could include
the amount, type, and emission factor of energy used on
offshore vessels and ships below 5,000 GT.
board, and other relevant information required under this
• the GHG intensity limits in light of the EU’s GHG
regulation. The monitoring plan must be in place within two
emission targets.
months for the first port call of the ship in the EU/EEA.
• inclusion of onboard carbon capture as a compliance
method.
The first reporting period of FuelEU is 1 January to 31
• zero-emission requirements for ships at anchorage.
December 2025, after which the first verification period
• exemptions and reward factors.
starts at the beginning of 2026. The milestones of the
verification period are described in Figure 2-6.
In case the IMO adopts a global GHG fuel standard the
EU will review the ambitions of the IMO regulation in
By 31 January every year, the ISM company needs to pro-
light of the Paris agreement target and examine if the
vide the FuelEU report to the verifier. The report should
FuelEU Maritime Regulation should be aligned, including
be verified by 31 March and the verifier will record the
avoiding any duplication of the GHG regulations. This
report in the FuelEU database (i.e. Thetis). Then the ISM
may imply that some FuelEU Maritime regulations will be
company has one month, until 30 April, to declare any
changed or removed.
banking, borrowing or pooling. By 30 June, if the ship
has a positive compliance balance or has paid the penal-
ty, the ISM company receives a Document of Compliance
(DoC) by the verifier or administering national authority.
FIGURE 2-6
Milestones in the annual
1 JANUARY – FuelEU Maritime
31 DECEMBER
31 DECEMBER verification cycle
Reporting
End of reporting
period
period
BY 30 JUNE
No deficit: BY 31 JANUARY
Verifier issues DoC
Company submits
Deficit: FuelEU Report
Authority issues DoC to Verifier
after receipt of
penalty payment
VERIFICATION PERIOD
Calendar year following the
reporting period
BEFORE 1 MAY
Verifier records verified BY 31 MARCH
compliance balance and Verifier records the
hours of non-compliant FuelEU Report in the
port calls and penalty in FuelEU Database
the FuelEU Database
BY 30 APRIL
Company declares
banking, borrowing, and
pooling in the FuelEU
Database Includes GHG
Selected Verifier records intensity, energy use,
Includes allocation of the total pool composition compliance balance
pool compliance balance to and non-compliant
each individual ship port calls
©DNV 2024
15
Fuel EU MARITIME Compliance strategies
3 Compliance strategies
CONTENT KEY POINTS

• An overview of FuelEU compliance • We find large differences in costs
strategies and their economic impacts and total expenses for the options
for an 80,000 DWT Bulk case-study investigated. We identify at least five
vessel. compliance strategies with lower
lifetime costs compared with blending
• The three strategies investigated are:
in bio-MGO. They offer relative cost
1) pay a penalty cost, 2) use fuels/
savings up to 16% (21 MUSD) over
energy with lower well-to-wake GHG
the vessel’s lifetime, showing the
intensity, and 3) use FuelEU flexibility
importance of choosing the most cost-
mechanisms (banking, borrowing, and
effective compliance strategy.
pooling).
• Paying the penalty cost is likely to be
• We assess the impact of energy-
the costliest option, especially if it is
efficiency measures on FuelEU
the strategy for all consecutive time
compliance costs.
periods.
• We highlight our cases in a
• Using LNG and bio-LNG is the least
standardized format showing main
costly option as using fossil LNG gives
assumptions and key findings, annual
lower WtW GHG intensity than required
and total costs, and annual GHG
until 2035 compared to MGO-fuelled
intensity including the total compliance
vessels. So, the LNG-fuelled vessel does
balance.
not need to use expensive biofuels
or RFNBOs until then. If it banks
compliance surpluses in the first years,
the LNG case vessel can potentially
achieve FuelEU compliance by running
on fossil LNG over its lifetime (2025–
2044).
• Energy-efficiency measures can

significantly reduce FuelEU compliance
costs whether the compliance strategy
is using low GHG intensity fuel or
paying a penalty cost.
16
Compliance strategies FuelEU MARITIME
• Wind-assisted propulsion can

potentially reduce the costs of fuel, EU
ETS, and FuelEU compliance, as it can
reduce fuel consumption and GHG
intensity.
• Using shore power that improves

GHG intensity and potentially reduces
fuel expenditure offers cost-effective
FuelEU compliance. With shore power
providing 100% of its energy in port, the
case vessel is compliant for 2025–2029
without having to use other low GHG
intensity fuels.
• Compliance pooling could be a tool

for sharing costs and helping to trigger
a business case for a vessel utilizing its
full green-fuel capacity, as highlighted
here for a methanol-capable vessel fully
utilizing its green methanol capacity.
17
Case-study vessel and compliance strategies TABLE 3-1

A bulk vessel of 80,000 DWT, operating solely in EU
80,000 DWT Bulk vessel – Operational assumptions
waters is used to examine the economic impact of the
various compliance strategies. Table 3-1 defines the main
Capacity 80,000 DWT
assumptions for this vessel used in all the case examples.
In Appendix A, we provide more detailed assumptions on First year of operation 2025
future fuel prices, EU allowance (EUA) price, CAPEX, the
reduction potential of WAPS, shore power, and ener- Lifetime 20 years (2025–2044)
gy-efficiency measures. It should be noted that this case
Annual fuel 6,260 t MGO equivalent
vessel is a theoretical vessel developed for illustrating the
consumption (267,300 GJ)
economic impacts of compliance strategies. The RFNBO
requirement possibly applicable from 1 January 2033 Quay side 285 t MGO equivalent
(see Section 2.3) is not included in this case study. (12,150 GJ)
At sea 5,975 t MGO equivalent
In this chapter, several compliance strategies are assessed (255,150 GJ)
for the 80,000 DWT Bulk vessel (see Table 3-2).
Area of operation 100% within EU/EEA
The case examples in the following sections are showcased
in a standardized card format. The format outlines the com-
pliance strategies evaluated and describes the main case
assumptions. Each case is presented with a figure outlining
the annual expenses and, if relevant, the pooling revenue key insights on the economic impact of each compliance
(see Table 3-3) and the required and actual well-to-wake strategy. For each compliance strategy, we assume that the
GHG intensity. The total expenses and compliance balance technology and fuels are available for the case vessel.
are summarized for the lifetime of the vessel, followed by
TABLE 3-2
Overview of FuelEU compliance strategies analysed in this study
Wind-assisted
Energy-efficiency propulsion
Compliance strategy Fuel options Shore power
measures systems
(WAPS)
Pay penalty MGO — — —
Pay penalty and use of energy-
efficiency measures
MGO — —
Blend in bio-MGO MGO / bio-MGO — — —
Blend in bio-MGO and use of
energy-efficiency measures
MGO / bio-MGO — —
Blend in bio-MGO and use of WAPS MGO / bio-MGO — —
Blend in bio-MGO and use of shore
power
MGO / bio-MGO — —
Fossil LNG / bio-LNG
Blend in bio-LNG
(MGO as pilot fuel) — — —
Blend in e-methanol MGO / e-methanol — — —
Blend in blue ammonia MGO / blue ammonia — — —
MGO vessel borrowing compliance
balance
MGO — — —
LNG vessel banking compliance LNG
surpluses (MGO as pilot fuel) — — —
Maximum e-methanol use and e-methanol
compliance pooling (MGO as pilot fuel) — — —
18
TABLE 3-3
Description of annual expense components and pooling revenue included in the case examples
Item Description
We consider the annualized additional CAPEX relative to a conventional

Annualized additional capital MGO-fuelled vessel (see Table A-4). In the case examples, the additional CAPEX is
expenditure (CAPEX) annualized by assuming 100% debt financing with an interest rate of 7% and
paydown time of 20 years (see Table A-3).
Operational expenditure We assume each compliance strategy has the same OPEX, and hence do not show
(OPEX) it as a cost element in the case examples.
Fuel cost Calculated based on the fuel price assumptions in Table A-1.
This cost of purchasing EU emission allowances (EUAs) is calculated based on the

EU ETS cost
assumptions in Table A-2.
Included for compliance strategies involving FuelEU penalties

FuelEU penalty cost
(see Section 3.1).
For the compliance strategy involving compliance pooling (see Section 3.3.3), we
Pooling revenue
assume a reduction in annual expenses proportional to the pooling ticket price.
19
3.1 Pay penalty

In this section, we examine the cost implications of ‘pay-the-penalty’ strategies.
Compliance strategy: Pay penalty
Case description and assumptions
Case vessel runs on fossil MGO throughout its lifetime, 2025 to 2044, and pays the penalty in all years.
Annual expenses (left) and well-to-wake GHG intensity (right)
24 100 Additional penalty*

Penalty
22 90
EU ETS
20 MGO
80
18
Annual GHG intensity (gCO2eq/MJ) Required GHG
intensity
70
Annual expenses (MUSD)
16 Actual GHG intensity

60
14
12 50
10 40
8
30
6
20
4
10
2
0 0 *Due to consecutive period multiplier

2025 2030 2035 2040 2044 ©DNV 2024
Total cost (2025–2044): Accumulated compliance balance (2025–2044):

With consecutive penalty multiplicator: 226 MUSD –62,358 tCO2eq
Key takeaways
• The annual penalty cost increases with stricter GHG intensity requirements, without the consecutive penalty
multiplicator, from 0.2 MUSD in 2025 to 5.2 MUSD in 2044.
• Even by 2030, the impact of the consecutive period multiplier on penalty cost is significant.
• From 2035 onwards, the annually penalty cost is higher than the EU ETS cost, if assuming a EUA price of
100 USD/tCO2eq.
20
Compliance strategy: Pay penalty and use of energy-efficiency measures
Case vessel runs on fossil MGO throughout its lifetime, 2025 to 2044, and pays the penalty in all years as in the
previous case example. But, in this case example, the vessel also applies energy-efficiency measures reducing the
annual energy demand at sea by 9% relative to baseline design. This case example illustrates the impact of ener-
gy-efficiency measures on the penalty cost.
24 100 Additional penalty*

Penalty
22 90
Annualized additional
20 CAPEX
80
EU ETS
18
Annual GHG intensity (gCO2eq/MJ)

MGO
70
16 Required GHG
intensity
60
14
Actual GHG intensity
12 50
10 40
8
30
6
20
4
10
2
0 0 *Due to consecutive period multiplier

2025 2030 2035 2040 2044 ©DNV 2024

With consecutive penalty multiplicator: 215 MUSD –57,160 tCO2eq
Key takeaways
• As shown with the actual and required GHG intensity lines, energy-efficiency measures (except for WAPS
technology) do not impact on the actual GHG intensity of the vessel, and as such, the FuelEU compliance status
does not change.
• However, energy-efficiency measures reduce the energy demand on board the vessel, reducing the fuel cost, the
EU ETS cost, and the FuelEU compliance balance, and resulting in a lower FuelEU penalty cost.
• Compared with a penalty strategy without energy-efficiency measures, the total cost is 11 MUSD lower over the
lifetime if including the consecutive penalty multiplicator, with an additional CAPEX of 4 MUSD.
21
3.2 Use fuels/energy with lower well-to-wake GHG intensity

In this section, we demonstrate how different fuels and energy sources with lower well-to-wake GHG intensity than
conventional fuel oils can be applied for attaining FuelEU compliance.
For each case example for the 80,000 DWT Bulk vessel, we assume that the vessel uses a minimum amount of lower GHG
intensity fuel to be compliant (i.e. achieve as a minimum an annual FuelEU compliance balance of zero).
Compliance strategy: Blend in bio-MGO
Case vessel runs on a mix of MGO and bio-MGO throughout its lifetime, 2025 to 2044, blending in bio-MGO to
maintain FuelEU compliance.
24 100 EU ETS
bio-MGO
22
90
MGO
20
Required GHG
80
intensity
18
70 Actual GHG intensity

16
14 60
12 50
10
40
8
30
6
20
4
10
2
0 0
2025 2030 2035 2040 2044 ©DNV 2024

134 MUSD 0 tCO2eq
Key takeaways
• The vessel incurs no penalties throughout its lifetime as it obtains a compliance balance equal to zero in all years.
• To remain compliant throughout the period, the vessel gradually increases the bio-MGO share of the fuel mix due
to stricter regulations, starting in 2025. This increases the annual fuel cost from around 4 MUSD in 2025 to above
6.5 MUSD in 2044. Furthermore, the annual EU ETS cost decreases with increasing bio-MGO consumption.
• If comparing the total cost, this compliance strategy is significantly less expensive than the pay-the-penalty approach.
22
Compliance strategy: Blend in bio-MGO and use of energy-efficiency measures
The case vessel operates on a mix of MGO and bio-MGO throughout its lifetime, 2025 to 2044. It has implemented
energy-efficiency measures, and blends in bio-MGO to maintain FuelEU compliance.
24 100 EU ETS
bio-MGO
22
90
MGO
20 Annualized additional
80
CAPEX
18 Annual GHG intensity (gCO2eq/MJ)
Annual expenses w/o
70
energy-efficiency
16
measures
60
14 Required GHG
intensity
12 50 Actual GHG intensity
10
40
8
30
6
20
4
10
2
0 0
2025 2030 2035 2040 2044 ©DNV 2024

130 MUSD 0 tCO2eq
Key takeaways
• When comparing with a blend-in bio-MGO strategy without energy-efficiency measures, the total cost is 4 MUSD
lower over the lifetime.
• With stricter FuelEU requirements, the cost saving from the energy-efficiency measures increases.
23
Compliance strategy: Blend in bio-MGO and use of wind–assisted propulsion

systems (WAPS)
The case vessel installs WAPS and operates on a mix of MGO and bio-MGO from 2025 to 2044, blending in bio-
MGO to maintain FuelEU compliance.
24 100 EU ETS
bio-MGO
22
90
MGO
80
CAPEX
18
Annual expenses w/o

70
WAPS
16
Required GHG
60
14 intensity
12 50
10
40
8
30
6
20
4
10
2
0 0
2025 2030 2035 2040 2044 ©DNV 2024

127 MUSD 3,912 tCO2eq
Key takeaways
• As illustrated by the dashed line, there is a significant annual saving from implementing WAPS compared to not having
it installed. The annual saving increases as FuelEU requirements become stricter.
• During the first five-year period (2025–2029), the vessel has an annual compliance surplus which could be banked or
used in a pool, potentially generating an indirect source of revenue (see Section 3.3.3).
24
Compliance strategy: Blend in bio-MGO and use of shore power
To maintain FuelEU compliance, the case vessel operates on a mix of MGO and bio-MGO from 2025 to 2044, covers
the required energy demand in port from shore power.
14 100 EU ETS
bio-MGO
90
MGO
12
Shore power
80
10 70 Annual GHG intensity (gCO2eq/MJ) CAPEX
Annual expenses w/o

60 shore power
8
Required GHG
50 intensity
6
40
4 30
20
2
10
0 0
2025 2030 2035 2040 2044 ©DNV 2024

133 MUSD 919 tCO2eq
Key takeaways
• During the first five-year period (2025–2029), the case vessel can comply with the FuelEU requirement solely
by using shore power and generating an annual compliance surplus that could be banked or used in a pool,
potentially generating an indirect source of revenue (see Section 3.3.3).
• Illustrated with the dashed line in the chart, the case vessel utilizing shore power obtains lower annual expenses
compared to a similar vessel not doing so.
25
Compliance strategy: Blend in bio-LNG
The case vessel operates on a mix of LNG and bio-LNG from 2025 to 2044 (MGO only for pilot fuel), blending in
bio-LNG to maintain FuelEU compliance.
24 100 EU ETS
bio-LNG
22
90
LNG
20 MGO
80

CAPEX
70
16 Required GHG
intensity
60
14
12 50
10
40
8
30
6
20
4
10
2
0 0
2025 2030 2035 2040 2044 ©DNV 2024

Key takeaways
• From 2025 to 2034, the vessel is over-compliant and generates compliance surpluses, which can potentially generate
income in a compliance pool (see Section 3.3.3 for more information).
• From 2035, the vessel needs to blend in some bio-LNG to maintain FuelEU compliance. From 2040, this leads to a
significantly increased fuel expenditure, though there is a reduction in the EU ETS expenditure.
• If comparing the total cost, this strategy is around 14 MUSD less expensive than the blend-in bio-MGO strategy, from
2025 to 2044.
26
Compliance strategy: Blend in e-methanol
The case vessel operates on a mix of MGO and e-methanol from 2025 to 2044, progressively increasing the
e-methanol consumption to maintain FuelEU compliance.
24 100 EU ETS
e-methanol
22
90
MGO
80
CAPEX
18

Required GHG
70
intensity
16
60
14
12 50
10
40
8
30
6
20
4
10
2
0 0
2025 2030 2035 2040 2044 ©DNV 2024

166 MUSD 0 tCO2eq
Key takeaways
• With stricter FuelEU requirements, the case vessel needs to progressively increase the e-methanol consumption,
increasing the annual expenses from around 6 MUSD in 2025 to above 8 MUSD in 2035 and above 11 MUSD in
2040.
• In the years 2025 to 2033, the RFNBO reward factor can be used, requiring a lower amount of e-methanol in the
fuel mix for FuelEU compliance. When comparing the years 2033 and 2034, the required amount of e-methanol
increases significantly in 2034 to obtain compliance.
• Note that from 1 January 2033, a separate RFNBO requirement will possibly be introduced, which could add to the
benefit of this case (see Section 2.3).
27
Compliance strategy: Blend in blue ammonia
The case vessel operates on a mix of MGO and blue ammonia from 2025 to 2044, progressively increasing the blue
ammonia consumption to maintain FuelEU compliance.
24 100 EU ETS
Blue ammonia
22
90
MGO
80
CAPEX
18
Required GHG
70
intensity
16
60
14
12 50
10
40
8
30
6
20
4
10
2
0 0
2025 2030 2035 2040 2044 ©DNV 2024

150 MUSD 0 tCO2eq
Key takeaways
• The vessel needs to progressively increase the blue ammonia consumption over the years due to stricter regulations.
• With more blue ammonia in the fuel mix, the annual expenses increase from around 6 MUSD in 2025 to above 8 MUSD
in 2044.
• Compared to the blend-in bio-LNG strategy, this strategy has a significantly higher total cost of around 30 MUSD over
the lifetime.
28
3.3 Flexibility mechanisms – borrowing, banking and pooling

A novel feature of the FuelEU Maritime Regulation is the option to bank and borrow compliance balance toward the
following year, and to pool compliance balance with other ships (see Section 2.1.5). In the following sections, each of the
flexibility mechanisms are described and illustrated with a case example. First, we show a borrowing case example, then a
banking case example, and finally a pooling case example.
3.3.1 Borrowing compliance balance
Compliance strategy: MGO vessel borrowing compliance balance
The case vessel operates on 100% fossil MGO in 2025 and 2026. In 2025 the vessel borrows compliance balance
from the following year and in 2026 the vessel pays the penalty cost (including 10% interest rate on the borrowed
compliance balance).
8 Extra penalty due to

borrowing (including
10% interest rate)
7 Penalty
EU ETS
6 MGO
0
2025 2026 ©DNV 2024
Key takeaways
• In 2025, the vessel can borrow a sufficient amount of compliance balance from the following year to offset compliance
deficits, resulting in zero penalty cost.
• In 2026, the vessel pays the penalty cost to compensate for the accumulated compliance deficits (2025 to 2026)
including interest on borrowed compliance balance. The total penalty cost in 2026 is about 0.5 MUSD.
29
3.3.2 Banking compliance surpluses
Compliance strategy: LNG-fuelled vessel banking compliance surpluses
The case vessel operates on LNG with MGO as pilot fuel from 2025 to 2044 and using banking as a flexibility
mechanism to obtain FuelEU compliance.
24 100 EU ETS
LNG
22
90
MGO
80
CAPEX
18
Required GHG
70
intensity
16
60
14
12 50
10
40
8
30
6
20
4
10
2
0 0
2025 2030 2035 2040 2044 ©DNV 2024

Key takeaways
• The vessel operating on LNG is over-compliant from 2025 to 2034, creating compliance surpluses. These surpluses can
be banked and used to later offset compliance deficits with the GHG intensity requirements.
• From 2035, the vessel exceeds the required GHG intensity, resulting in annual compliance deficits. The banked
surpluses from 2025 to 2034 can cover these deficits from 2035 to 2044, ensuring compliance throughout the vessel’s
lifetime.
• This demonstrates that LNG, using the banking mechanism, is a viable fuel option from 2025 to 2044, allowing for
complete avoidance of penalties.
30
31
3.3.3 Pooling of compliance balance Pooling potential (example: vessel maximizing use of
e-methanol)
In this section we look at some of the key aspects to con- To illustrate the pooling potential, the case vessel running
sider in a FuelEU compliance pool. First, we present the fully on e-methanol during its lifetime from 2025 to 2044
pooling potential of one green vessel running on e-meth- joins a compliance pool with other vessels running on
anol. Second, we quantify key factors that will influence the fossil MGO only. For simplicity, the e-methanol vessel and
willingness of owners of vessels running on MGO to pay the MGO vessels are assumed to all have the same annual
a ticket price in exchange for being part of a compliance energy requirement and share of time in the EU/EEA.
pool with one green vessel. Finally, we give case results for As shown in Figure 3-1, the e-methanol vessel can offset
a vessel running on e-methanol in a compliance pool with the annual compliance balance deficits for a total of 54
vessels running on MGO. fossil MGO vessels in the years 2025 to 2029. Thereafter,
FIGURE 3-1
Maximum number of fossil MGO vessels that one e-methanol vessel with 100% of its operations subject to
FuelEU can cover annually in a compliance pool in the period 2025–2050. All values are rounded to the nearest
whole number
Units: Annual number of fossil MGO vessels
60
54 54 54 54 54
50
40
30
20
13 13 13 13
10
10
3 3 3 3 3
1 1 1 1 1
0
2025 2030 2035 2040 2045 2050
©DNV 2024
32
the number of vessels that can be offset reduces sharply

to 13 (2030–2033), 9 (2034, due to the RFNBO reward
factor not being applicable), 3 (2035–2039), and finally 1
(2040–2044). This reduction is due to the FuelEU reduc- To make a pool an attractive
tion requirements becoming more stringent, reducing the
annual compliance surplus generated.
compliance option for owners of
Pool ticket pricing mechanism
To make a pool an attractive compliance option for owners
vessels running on MGO,
of vessels running on MGO, the price for the pool ticket
must be financially advantageous compared to the other the price for the pool ticket must
compliance alternatives. For an MGO-fuelled vessel, the two
main compliance alternatives to consider are: be financially advantageous
i) use fuels with drop-in capability and low GHG intensity compared to the other
(e.g. bio-MGO)
ii) pay the penalty cost. compliance alternatives.
Therefore, it is natural to use the added cost of these two
compliance alternatives as a reference point when setting
the pool ticket price.
In Figure 3-2, we illustrate the willingness of pool par-

ticipants (e.g. owners of MGO-fuelled vessels) to pay
a pool ticket price to the pool leader (e.g. owner of a
green vessel). We have applied the same case vessel With the constraints on the pool ticket price discussed
assumptions as in the compliance strategies involving above, a key question is whether or not the business case
payment of penalty (see Section 3.1) and blend-in of adds up for an owner with a methanol-capable tonnage
bio-MGO (see Section 3.2). We see that given these in- to utilize its full methanol consumption capacity in a
put assumptions, the option to use drop-in bio-MGO is FuelEU compliance pool. In the following, we look more
significantly less expensive than paying the penalty cost closely into this.
(added cost of 0.09 MUSD compared to 0.24 MUSD).
In this scenario, given that bio-MGO is available, it is
reasonable to assume that the added cost of using bio-
MGO will serve as the most important reference point
for the pool ticket price.
FIGURE 3-2
Pool participant’s willingness to pay for pool tickets
Units: Annual expenses (MUSD)
6 5.7 Pay penalty cost
5 5.6
4 0.24 Use drop-in bio-MGO
5.5
3 0.09
5.4
2
5.3
1
0 5.2
MGO + MGO + MGO + MGO + MGO + MGO +
penalty pooling bio-MGO penalty pooling bio-MGO
2025 2025
EU ETS cost MGO bio-MGO Penalty ©DNV 2024
33
Compliance strategy: Maximum e-methanol use and compliance pooling
The case vessel operates on the maximum amount of e-methanol with MGO as pilot fuel from 2025 to 2044, selling
all compliance surplus to MGO-fuelled vessels in a compliance pool. The pooling ticket price is based on either the
FuelEU penalty cost (high pooling revenue) or the added cost of using bio-MGO (low pooling revenue).
20 Total annual Total annual Total annual e-methanol

expense expense with expense with
without any pooling pooling e-methanol after
18 pooling revenue revenue deduction of pooling
revenue (low) (high) revenue (low)
16 e-methanol after
deduction of pooling
14 revenue (high)
EU ETS
12 MGO
10 CAPEX
Annual expenses
8 baseline MGO vessel
blending in bio-MGO
6
0
2025 2030 2035 2040 2044 ©DNV 2024

122 MUSD (high pool revenue) 0 tCO2eq
251 MUSD (low pool revenue)
Key takeaways
• Without any pooling revenue, the annual expenses of the case vessel are far higher than that of a conventional MGO
vessel blending in bio-MGO to stay compliant (ref. stippled black line (see ‘Compliance strategy: blend in bio-MGO' in
Section 3.2)). However, with pooling revenue, the net annual expense can decrease significantly.
• With low pooling revenue, the annual expense for the vessel is still higher than that of a conventional MGO vessel
blending in bio-MGO to stay compliant, and during the whole time period. However, given a high pooling revenue, the
net annual expense is significantly lower for the case vessel until 2034 (the first year without a RFNBO reward factor). As
time progresses, the annual compliance surplus generation of the case vessel decreases. As a result, pool ticket revenue
becomes lower and lower. Pooling is therefore more attractive during the first years.
• The results presented in this case example are sensitive to the fuel price assumptions and the well-to-wake GHG
intensity of the fuel. Note that from 1 January 2033, a separate RFNBO requirement will possibly be introduced, which
could add to the benefit of this case (see Section 2.3).
34
Two important aspects
of the compliance strategy
are the price and availability of
low GHG intensity fuels.
35
3.4 Cost comparison of the selected

compliance strategies
The best strategies offer relative
Selection of FuelEU compliance strategies has clear cost
implications for shipowners. In Figure 3-3, we compare the cost savings up to 16%,
total lifetime costs (2025–2044) of each compliance strate-
gy covered in Sections 3.1, 3.2 and 3.3 (except for borrow- or 21 MUSD, over the lifetime
ing compliance balance). All costs are shown in nominal
values with no discounting of future cash flows. of the vessel, underscoring
Figure 3-3 shows large differences in the cost picture and
the importance of selecting
the total expenses for the options investigated. Under
the input assumptions used, we identified at least five
compliance strategies with lower lifetime expenses com-
the most cost-effective
pared to the ‘blend in bio-MGO’ option. These strategies
offer relative cost savings up to 16%, or 21 MUSD, over compliance strategy.
the lifetime of the vessel, underscoring the importance of
selecting the most cost-effective compliance strategy.
Our findings across the evaluated compliance strategies are:

• Paying the penalty cost is likely to be the most operational profile and energy demand in port,
expensive option, especially if selected as the meaning that other compliance measures are
compliance option for all consecutive time periods. needed, especially as FuelEU requirements tighten.
• Using LNG and bio-LNG is the least costly • Compliance pooling in FuelEU Maritime has
compliance strategy. This is largely because using potential to be a tool for sharing costs and helping
fossil LNG gives a lower well-to-wake GHG intensity to trigger a potential sustainable business case
than required during the first 10 years of the period for a vessel utilizing its full green-fuel capacity,
compared to MGO-fuelled vessels. This enables the showcased in this paper with a methanol-capable
LNG-fuelled vessel to avoid having to use expensive vessel utilizing fully its green methanol capacity.
low GHG intensity fuels until 2035. If it is banking Three compliance strategies – blend in bio-MGO
compliance surpluses in the first years, the LNG case with either WAPS or shore power, and the LNG
vessel can potentially achieve FuelEU compliance vessel banking compliance surpluses – will also
by running on fossil LNG over its whole lifetime have compliance surpluses that potentially can
from 2025 to 2044. generate additional revenue in a compliance pool
not reflected in Figure 3-3.
• Using bio-MGO in combination with WAPS looks an
attractive option that reduces fuel consumption and
It should be recognized that the results presented
improves well-to-wake GHG intensity. This results in
are sensitive to the input assumptions, such as the
a lower total cost compared to the blend-in bio-
fuel price, fuel availability12, and the well-to-wake
MGO strategy without WAPS.
GHG intensity of the fuels.
• Energy-efficiency measures can significantly reduce
the costs of fuel, EU ETS, and FuelEU compliance,
resulting in a lower total cost in the ‘pay-the-penalty'
and ‘blend in bio-MGO' strategies. However,
energy-efficiency measures alone cannot act as a
FuelEU compliance measure.
• Using shore power is a cost-effective way to achieve

FuelEU compliance, improving GHG intensity and
potentially reducing fuel expenditure. However, for
the case vessel, the total GHG intensity reduction
potential from shore power was limited due to the
36
FIGURE 3-3
Comparison of total lifetime costs for each compliance option
Units: Total expenses 2025–2044 (Million US Dollars)
280
260 87%
5
240 69%
60%
220
200
62
180 57 24%
160 12%
Ref. -3% –1% 33
140 44 40 -5% –9%
–11% 229 32
–16%
120 32 29 31 5
31
100 5 29 58
40 37 32 37
80 39 35 25 32 16
100
60
74 55 61 65
40 80 58 62 66
64 63
20 4 4 8 8
7 7 9 9
2 17 17 9 9 17
0
Pay Pay Blend in Blend in Blend in Blend in Blend in LNG Blend in High Low Blend in
penalty penalty bio-MGO bio-MGO bio-MGO bio-MGO bio-LNG vessel e-metha- revenue revenue blue
and use and use and use and use banking nol ammonia
of energy- of energy- of WAPS of shore compli-
efficiency efficiency power ance Max e-methanol use and
measures measures surpluses compliance pooling
Ammo-
MGO LNG Methanol
nia
Additional CAPEX Shore power Penalty cost bio-MGO

LNG MGO Additional penalty e-methanol
Blue ammonia bio-LNG (consecutive penalty EU ETS
multiplicator)
% Cost relative to
©DNV 2024
blend-in MGO
37
Fuel EU MARITIME Compliance and commercial impacts
4 Compliance and commercial impacts
CONTENT
• Roles and responsibilities of five key • Potential impacts on commercial
actors impacted by FuelEU Maritime: arrangements from the perspectives of the
national authority, ISM company, shipowner, ISM company, shipowner, charterer, and
charterer, bunker supplier. bunker supplier.
• Managing compliance and interaction • The importance of data management.

between ISM company and national
authority.
KEY POINTS
• The ISM company is the responsible entity each party has on fuel selection, and by
for FuelEU compliance. Each ISM company extension, the technical and operational
will be assigned an Administering State, control of the FuelEU compliance balance by
i.e. the national authority of an EU/EEA the end of the charter party period.
Member State.
• To reduce the risk of low GHG emission fuels
• The ISM company must secure coverage being unavailable or uneconomical, the
from the shipowner for any FuelEU- shipowner or charterer could consider more
related cost liabilities by updating the ship long-term fuel purchase contracts or offtake
management contract. agreements.
• Shipowners may have to provide financial • To document the fuel credentials for the
guarantees and compensate ISM companies verification of the FuelEU Report, a Proof of
for any additional compliance cost. In Sustainability (PoS) or similar document from
addition, owners may contractually take the bunker supplier should accompany the
ownership of any compliance surplus Bunker Delivery Note.
generated by a vessel.
• Verified emissions data is becoming a vital
• Over time, charterers, as purchasers of element for compliance and maintaining
maritime transportation, are likely to absorb operational and commercial integrity across
most of the added cost arising from FuelEU maritime value chains.
Maritime.
• The type of charter party contract is

significant, as it determines the influence
38
Compliance and commercial impacts FuelEU MARITIME
4.1 Roles and responsibilities

Managing the compliance and the commercial transac- The bunker supplier is responsible for supplying and
tions of FuelEU will involve many stakeholders across the delivering fuel to the ships. In case of low GHG emission
supply chain as shown in Figure 4-1. The main actors and fuels, the bunker supplier and the entire supply chain
their responsibilities are as follows: must be certified, and when the fuel is delivered to the
ship, the ISM company must receive a Proof of Sustain-
The ISM company is the responsible entity for ability. The shipowner or charterer may want to enter into
compliance and interacts with the Administering State long-term fuel purchase supply contracts.
(which is the national authority of the Member State
responsible for the company). The ISM company is Given the potential financial impact, as shown in Chap-
also responsible for monitoring and reporting of data, ter 3, it is important for each party to understand their
including receiving documentation from the bunker potential obligations and privileges, how these might
supplier of the low GHG fuel used on board, and paying affect their commercial and compliance agreements, and
any penalties due to compliance balance deficits (see to consider necessary changes to incorporate these obli-
Section 2.4). The ISM company has, however, gations and privileges. Unless this is clarified in contracts,
limited impact on bunker purchase strategies and the costs may ultimately remain on the ISM Company as
sailing patterns. the company responsible to the authorities. To ensure
that financial settlements are settled in a timely and effi-
The shipowner is responsible for the ship as an asset. cient manner, the ISM company will often be required to
The owner must update its commercial contracts and share verified data with the shipowner and the charterer.
manage any financial settlements with the ISM company,
the charterer, and in many cases the bunker supplier for In the following, we first look into how to manage compli-
the purchase of fuels. ance and the interaction between the ISM company and
the national authority. Then we discuss the commercial
The charterer is responsible for the operational decisions impacts for each of the key stakeholders; the ISM compa-
relating to transport of the cargo. The charterer must ny, shipowner, charterer, and the bunker supplier. Informa-
update its commercial contract and manage financial tion is also provided on how FuelEU Maritime is expected
settlements with the shipowner, and in many cases the to be addressed for different charter party contract types,
bunker supplier for the purchase of fuels. and necessary sharing of verified emissions data.
FIGURE 4-1
FuelEU Maritime impact on compliance and commercial transactions
COMPLIANCE COMMERCIAL
Issuance of Document Transferring Updating
of Compliance (DoC) compliance cost commercial
by verifier or national liabilities agreements
authority
Submits FuelEU Sharing verified Sharing verified

National Maritime report and ISM emissions data Shipowner emissions data Charterer
authority manages compliance company
balance
Payment of penalty Provides financial guarantees Settlement of FuelEU

to national authority and compensates compliance cost and any
(if applicable) compliance costs remaining compliance balance
according to contract terms
Provides Proof of
Sustainability Agreement on purchase
of fuels (charterer or
Bunker supplier shipowner) ©DNV 2024
39
4.2 Managing compliance
and settlement of the penalty if there is a compliance

4.2.1 Responsible entity balance deficit.
The responsible entity for FuelEU compliance is the ISM
Company.13 Contrary to how the EU ETS works, the ISM
Company will always be responsible for compliance,
and this cannot be shifted to another entity. The ISM
4.2.2 Administering state and national
company needs to report annual GHG emissions data for authority
FuelEU compliance and declare banking, borrowing, and Each ISM company will be assigned an Administering State
pooling for handing the compliance balance to achieve which is the national authority of an EU/EEA Member State.
compliance with FuelEU Maritime. It also needs to pay Companies registered in an EU/EEA Member State will be
the FuelEU penalty cost to the relevant national authority assigned to the national authority of that country. Com-
when a vessel has a compliance deficit even after decla- panies registered in a country outside the EU/EEA will be
ration of banking, borrowing, and pooling. assigned to the national authority of the EU/EEA Member
State where their ships had the most port calls in the last
In the event of a change of company during a reporting four years. For a shipping company that is also responsible
period (i.e. 1 January to 31 December), the former com- for ships under the EU ETS14, the Administering State will be
pany needs to submit a verified partial FuelEU Report the same as the Administering Authority under that regu-
as soon as possible, within one month of the transfer. lation. An EU/EEA Member State may have assigned the
However, it is the ISM company at the end of the report- responsibility for ETS and FuelEU to two different national
ing period which will be responsible for compliance for authorities within the same country. The reason is that
the full reporting period, even for periods when it was FuelEU is usually assigned to the maritime authority, while
not the ISM Company. This includes managing the com- ETS responsibility may lie with the national authority which
pliance balance through banking, borrowing, or pooling, is also responsible for other industries to which ETS applies.
40
4.3 Managing the commercial impact

FuelEU Maritime brings several novel mechanisms which influence on fuel choices and other compliance options.
are expected to impact commercial processes and Consequently, the ISM company needs to update the
contracts. The main impact on the annual GHG intensity ship management contract to secure coverage from the
is the fuel used, which in many cases is determined and shipowner for any FuelEU-related cost liabilities.
purchased by the charterer. Further, as described in Sec-
tion 2.1.5, FuelEU Maritime includes the option of pool- It is the ISM company that on 31 December each year
ing compliance across ships, and if there is a compliance is responsible for compliance for the full calendar year,
balance deficit a financial penalty must be paid by the even if it took over management of the ship during the
ISM Company. In the shipping industry, where complex year. This implies that when taking over a ship, ISM com-
and various sets of commercial agreements are common, panies should ascertain the compliance balance of the
it will be important for companies to assess current status ship from the previous manager to ensure that any deficit
and understand their potential future exposure to FuelEU is compensated for.
Maritime.
In the following sections, we discuss the potential im-

pacts from the perspective of the ISM company, ship
4.3.2 Shipowners and charterers
owner, charterer, and bunker supplier. In many cases, Shipowners and charterers have strong common interest
these actors may be the same entity, for which the to regulate FuelEU compliance equitably, ensuring that
management becomes an internal company issue, while any compliance surplus or deficit is managed in a way
in other cases these are different entities where the that maximizes the financial benefit or minimizes compli-
relationship, risks, and responsibilities are managed by ance cost.
commercial contracts.
Since the ISM company is unlikely to accept any financial
risk associated with FuelEU Maritime, we expect that
shipowners will be required to provide financial guaran-
4.3.1 ISM company tees and compensate ISM companies for any additional
Since the ISM company is responsible for FuelEU compli- compliance cost. In addition, shipowners may contractu-
ance, this potentially creates a situation in which they may ally take ownership of any compliance surplus generated
bear compliance and financial liability towards national by a vessel. Such terms need to be defined in the ship
authorities within the EU/EEA, despite lacking direct management contract.
TABLE 4-1
Overview of different contract types and potential FuelEU-related considerations in contract terms
Party with operational control

Potential consideration of FuelEU
Type of contract of FuelEU compliance balance
compliance in contract terms
(i.e. pay for the selected fuel)
Requirement to meet GHG intensity target

over the charter period.
Time charter Charterer
Settlement terms for charter party
compliance balance.
Compliance cost included in charter rate.

Voyage charter Shipowner In some cases: separate settlement terms
for charter party compliance balance.
Contract of
Shipowner Compliance cost included in freight rate.
affreightment
41
At the other end, charterers are, over time, likely to

absorb most of the added cost due to FuelEU compli-
ance as the purchasers of maritime transportation. This
is, however, contingent on commercial contracts be-
tween shipowners and charterers being reviewed and
updated to consider FuelEU compliance. The transfer
may also take time depending on contract duration,
market conditions, and bargaining power between the
various actors. Parties may already have incorporated
‘polluter pays principle’ clauses in their agreement
when implementing EU ETS, which could also cover Exactly how FuelEU compliance
FuelEU Maritime.
will be managed depends largely
If the ISM company of a vessel changes during the
calendar year, it is important for shipowners and
charterers to ensure contractually that their control of
on the type of commercial contract,
the compliance surplus is maintained. This is especially
important for shipowners and charterers that purchase such as time charter, voyage
low GHG emission fuels with the aim of generating
compliance surpluses. charter, and contract of affreightment.
Exactly how FuelEU compliance will be managed

depends largely on the type of commercial contract,
such as time charter, voyage charter, contract of
affreightment, and so on. The type of charter party
contract (see Table 4-1) is significant, as it determines
the influence each party has on fuel selection and, by
Example: Pooling of compliance under time charters

In the below example, we see a charterer with four in addition to vessel 1 and vessel 2 chartered from
vessels on time charter contracts. Three of the vessels shipowners A and B. The charterer may allocate and
have a compliance deficit of 350 tCO2eq during the bank the total surplus of 150 tCO2eq for its owned
charter party period, while one vessel (vessel 3) has vessel (vessel 4). Alternatively, it may change the pool
a compliance surplus of 1,200 tCO2eq. In case the composition (i.e., add more ships with compliance
charterer has contractually secured pooling rights for deficits), or pending its creation, sell compliance sur-
the compliance balance of each vessel under time plus in a compliance surplus market. In case there is a
charters, it can use the surplus generated by vessel compliance deficit the charterer would be required to
3, to compensate vessel 4 (owned by the charterer), pay the penalty incurred.
Compliance balance Compliance balance

by vessel for pool
TC
Owner A Vessel 1 –350 t
TC
Owner B Vessel 2 –350 t
Charterer 150 t
TC
Owner C Vessel 3 1,200 t
TC
Vessel 4 –350 t
Owned by charterer
TC: Time charter; t: Tonne CO2eq ©DNV 2024
©DNV 2024
Example showing how charterers can manage FuelEU compliance pooling for vessels on time charters.
42
extension, the technical and operational control of the before the reporting period is completed, and multiple
FuelEU compliance balance by the end of the charter charterers would be involved during a reporting period.
party period.
An adjustment may be needed for vessels with dual-fuel
Below, we provide more information and examples on capability or installing a wind-assisted propulsion system,
how FuelEU is expected to be addressed for each con- where in case of compliance surpluses the shipowner
tract type. may require some compensation for additional capital
expenses.
Time charter contract
In time charters, the charterer typically covers fuel costs Voyage charter contracts and Contract of
and selects the fuel to be used by the vessel. In this case, Affreightment (CoA)
the charterer has significant operational control of the In voyage charters and CoAs, the shipowner typically
compliance balance for the charter party period. covers fuel costs and selects the fuel to be used by the
vessel. In this case, the shipowner has strong technical
To account for this, clauses defining requirements to and operational control of the compliance balance for
meet the GHG intensity target and use of compliant the charter party period.
fuels over the charter party period can be added to the
contract. The contract also needs to regulate compensa- To account for FuelEU compliance costs, we expect
tion for compliance balance surplus or deficit. Since the that these will be included in the charter rate by the
charterer covers the fuel cost, for long-term charters of shipowner. To keep compliance costs under control,
one year or more it may require obtaining the right to it will be important for shipowners to predict, with a
decide on any pooling arrangement. The shipowner may sufficient degree of accuracy, the compliance costs of
give the charterer an obligation to cover any deficit in a single voyages in advance of accepting charter parties.
pool, or it may require coverage of any deficit based on In some cases, there may be a separate settlement of
the penalty cost. For shorter time charters of less than a compliance costs in voyage charters, in which the settle-
year, closing a compliance deficit using the penalty cost ment of compliance deficit or surplus may resemble
may be preferable as the actual cost may not be seen that of time charters.
Example: Pooling of compliance under voyage charters and CoA

In the below example, shipowner A’s vessels all have in advance, of the cost of using low GHG emission
compliance deficits of 350 tCO2eq. Shipowner B, fuels. After pooling, a compliance surplus of 1,750
on the other hand, has vessel C with a significant tonnes CO2eq remains. This is under ownership of
compliance surplus of 3,500 tCO2eq. To attain com- Shipowner B, who may allocate and bank it for one
pliance, shipowner A provides compensation to ship of its owned vessels. Alternatively, it may change
owner B in exchange for agreeing to create a com- the pool composition and add more ships with
pliance pool between the two fleets. The financial compliance deficits, or sell compliance surplus in a
compensation will likely depend on alternative costs compliance surplus market, pending existence of
of compliance, via penalty payment or if agreed such a market.
Compliance balance Pool compliance

by vessel balance
Vessel 1 –350 t
Owner A
Vessel 2 –350 t
Monetary
Vessel 3 –350 t
compensation
1,750 t
given by owner A
Vessel 1 –350 t
to owner B
Owner B
Vessel 2 –350 t
Vessel 3 3,500 t
©DNV 2024
Example showing how shipowners can manage FuelEU compliance pooling for vessels on voyage charters.
43
4.3.3 Bunker suppliers

Fuels are the key factor determining FuelEU compli- To reduce the risk of unavailable
ance, and consequently the bunker supplier will be an
important actor. There are two significant impacts: the or too expensive low GHG emission
first is as a supplier of the low GHG emissions fuel to
the shipowner or charterer, and the second is to be cer- fuels, the shipowner or charterer
tified and document to the ISM Company that the deliv-
ered fuel qualifies according to FuelEU requirements. could consider more long-term
Fuel offtake agreement fuel purchase contracts or offtake
A key challenge in FuelEU compliance will be to secure
low GHG emission fuels, particularly as the require- agreements.
ments become more stringent and the demand for such
fuel increases. This applies to all fuel types including
drop-in fuels such as bio-MGO, and other alternative
fuels such as methanol, methane, and ammonia.
For companies which have invested in ships running on

alternative low GHG emission fuels such as ammonia,
methane, and methanol, it can be beneficial to fully
utilize the onboard fuel technology by using such fuels
100% of the time and selling excess compliance bal-
ance. It may not be possible, however, to purchase low
GHG emission fuels in any ports or even in the regions
where the ship trades.
44
To reduce the risk of unavailable or too expensive low into emissions and exposure, shipowners and charterers
GHG emission fuels, the shipowner or charterer could can avoid delays in settlement and reduce the risk of
consider more long-term fuel purchase contracts or conflicting interpretations of data.
offtake agreements. The price of the fuel should be lower
than the alternative of paying the penalty, but also lower Ensuring accuracy and consistency in emissions data
than the expected future pooling price. sharing is crucial. Each data transfer, whether ongoing or
at set intervals, needs to be secure, verified, and easily
Documentation of qualified fuels traceable. A standardized approach to emissions data
In Section 2.1.1 we describe FuelEU Maritime’s categori- management – such as through centralized, verified
zation of fuels. To document the fuel credentials for the data platforms – can provide consistency across multiple
verification of the FuelEU Report, a Proof of Sustainability stakeholders while reducing the administrative workload.
(PoS) or similar document should accompany the Bunker Reliable data not only instils trust between parties but
Delivery Note. The PoS is a declaration by the bunker also supports a proactive approach to compliance man-
supplier, or other operator in the fuel supply chain, stat- agement, paving the way for efficient decision-making
ing the origin of the fuel, the total GHG emissions during and smoother commercial operations.
its production and whether it fulfils any sustainability
requirements. The PoS issued by the bunker supplier is To meet the demands of FuelEU Maritime and foster
audited by a certification body according to the require- efficient, collaborative relationships, all companies and
ments of a certification scheme under the Renewable stakeholders affected by this regulation should prioritize
Energy Directive (RED) fuel certification framework15, to a structured approach to emissions data management.
ensure that the bunker supplier maintains a mass balance Key practices include ensuring continuous data quality
of sustainable materials and that the claim in the PoS is from the vessels, standardizing data formats across plat-
issued only to one user.16 forms, and establishing controlled, consistent processes
for data sharing. A single-source approach to data – in
If it cannot be documented that a fuel delivered to and which verified emissions data is shared from a central-
used on a ship complies with the relevant sustainability ized point – can eliminate the risk of double reporting,
and GHG fuel-saving criteria of these categories, the fuel reduce administrative burden, and streamline the pro-
should be considered as a fossil fuel using the default cess. Adopting these practices will enhance operational
values of the least favourable fossil-fuel pathway. efficiency, trust, transparency, and alignment between
shipowners, charterers, and ISM companies. In a regu-
latory environment that places a premium on reliable,
verified data, robust data governance will be essential
4.4 Data management in daily for long-term resilience and effective FuelEU-related cost
operations management.
Verified emissions data is becoming a vital element not

only for compliance but also for maintaining operational
and commercial integrity across the maritime value chain.
Beyond merely meeting regulatory demands, this data
is essential for transparency in cost allocation and for
enabling shipowners, ISM companies, and charterers
to make informed, mutually agreed decisions about
FuelEU-related expenses.
To accurately assess costs associated with FuelEU com-

pliance, all stakeholders should rely on a trustworthy,
shared dataset. For instance, the ISM company needs to
continuously provide the shipowner with verified emis-
sions data to help monitor ongoing exposure levels and
facilitate seamless, timely settlements of FuelEU-related
costs. This sharing of data ensures that compliance ob-
ligations are met and cost impacts are distributed fairly,
reducing friction and minimizing disputes.
For the shipowner, obligations extend further; as per

the charter party agreement, they may also be required
to share verified emissions data with the charterer. This
process can involve sharing data in a periodic or even
voyage-specific format, allowing both parties to adapt
and account for FuelEU costs. By offering clear insight
45
Fuel EU MARITIME Status of IMO regulatory development of GHG
5 Status of IMO regulatory

development of GHG
CONTENT
• A status report on work in the IMO to regulate GHG emissions:
• Negotiation of a net-zero framework.
• Onboard carbon capture.
• Review of the Carbon Intensity Indicator (CII) and Energy Efficiency Existing Ship Index (EEXI).
KEY POINTS
• The IMO is working on implementing the • The IMO will review the CII and EEXI by the
GHG strategy and the ‘basket of mid-term end of 2025.
measures’ to ensure shipping achieves the • This is likely to include CII reduction
ambitions of the 2023 IMO GHG strategy. requirements for 2026–2030, new and
amended correction factors and voyage
• An overarching structure, the IMO net-
adjustments, and a new metric for cruise
zero framework, has been agreed for the
ships.
necessary regulatory amendments to
• More fundamental changes to the CII
MARPOL Annex VI.
and the IMO’s Ship Energy Efficiency
• With adoption expected in autumn 2025
Management Plan (SEEMP) may not be
and entry into force about mid-2027, this
concluded by 2025 but could remain
framework has two parts:
under consideration.
• A technical element mandating use of
lower GHG intensity marine fuels.
• An economic element, i.e. a GHG
emissions pricing mechanism.
• The IMO is developing a workplan for

developing a regulatory framework,
including safety and environmental
regulations, for onboard carbon capture
systems.
46
Status of IMO regulatory development of GHG Fuel EU MARITIME
The IMO is now working on implementing the GHG carbon captured and permanently stored. For any emis-
strategy and the so-called basket of mid-term measures, sion reduction to be recognized, it is important to have
to ensure that shipping follows the indicative checkpoints assurance that the CO2 or carbon is delivered to a facility
– reducing total GHG emissions by 20%, striving for 30% that ensures that it is permanently stored. Internationally
in 2030 and then 70%, and striving for 80% in 2040, all recognized certification schemes are likely to be needed.
compared to 2008 – and that it reaches the revised ambi- The aim is to complete the work in 2028.
tion to ‘reach net-zero GHG emissions by or around, i.e.
close to, 2050’. This implies zero well-to-wake (WtW) GHG Carbon Intensity Indicator (CII) and Energy Efficiency
emissions, although negotiations are ongoing to deter- Existing Ship Index (EEXI)
mine how this is defined and implemented (see below). Independently of the development of the new basket of
measures, the IMO’s Carbon Intensity Indicator (CII) and
As of MEPC 82 in October 2024, the IMO has agreed on Energy Efficiency Existing Ship Index (EEXI) regulations
an overarching structure, the ‘IMO net-zero framework’, are required to be reviewed by the end of 2025. The
for the needed regulatory amendments in MARPOL review has started with data gathering, and the analysis
Annex VI. This is intended to form the basis for further began in October 2024. The review will conclude with
negotiations of new regulations which, according to the proposed revisions to the regulations and associated
agreed timeline, will be adopted in autumn 2025 and guidelines in spring 2025. This is likely to include CII
enter into force about mid-2027. reduction requirements from 2026 to 2030 and new and
amended correction factors and voyage adjustments,
The net-zero framework is expected to consist of two as well as a new metric for cruise ships. However, more
parts: fundamental changes to the CII and SEEMP, such as a
revised enforcement mechanism, an energy-based met-
• A technical element, which will mandate the use of lower ric, or application of LCA guidelines to take into account
GHG intensity marine fuels. non-fossil fuels, may not be possible to conclude by 2025
• An economic element, which will be a GHG emissions and could continue to be considered beyond that year.
pricing mechanism linked directly to the technical fuel
GHG intensity mechanism or as a standalone mechanism. There are no proposals to make any changes or addition-
It can also be a flexibility mechanism on the fuel GHG al requirements related to the EEXI. The Energy Efficiency
intensity requirement, such as pooling and a penalty as Design Index (EEDI) for newbuilds is not under review.
implemented in FuelEU Maritime. A Phase 4 with further reduction requirements has been
discussed, but with no conclusion on when or if it should
be applied. The discussion could be taken up at a later
The GHG strategy states that the GHG reduction ambi-
stage.
tions should take into account WtW emissions. This can
be done in diverse ways, either by setting a requirement
on the total WtW GHG intensity of energy used, or by
using tank-to-wake (TtW) GHG emissions, but adjusted
based on well-to-tank (WtT) emissions and other sustain-
ability aspects. Regardless of the agreed scope, the IMO
is developing lifecycle assessment (LCA) guidelines to
support the regulatory measures, detailing how the WtT
and TtW emissions of marine fuels should be calculated
and certified. More work is needed to complete these
guidelines, and a scientific working group has been
established to consider new default fuel pathway values,
certification of actual WtT and TtW emission factors, and
more general methodological LCA issues.
Onboard carbon capture

Onboard carbon capture has seen increased interest as
a possible solution for decarbonizing shipping. The IMO
has started developing a workplan on the development
of a regulatory framework, including both safety and
environmental regulations, for the use of onboard carbon
capture systems. The application of onboard carbon
capture will be incorporated in the LCA guidelines,
though further discussions are needed to address other
regulatory barriers, particularly those related to the fate
of the captured carbon. The net GHG emission reduction
of onboard carbon capture will depend on the amount of
47
Fuel EU MARITIME Appendix
Appendix A – input assumptions

Below we list key input assumptions used in the case study presented in Chapter 3.
TABLE A-1
Input assumptions for each fuel-type considered
Well-to-wake
Share of pilot fuel oil
Fuel molecule Fuel class GHG intensity Fuel price (USD/GJ)
(by energy)
(gCO2eq/MJ)17
Fossil 90.63 – 15
MGO (diesel)
Biofuels 34.02 – 35
Fossil 77.8018 12
Methane (LNG) 5%
Biofuels 36.42 30
e-methanol RFNBO 30.67 10% 60
Blue ammonia LCF 30.84 10% 35
Shore power – 0 – 40
TABLE A-2 TABLE A-3
EU ETS assumptions Economic assumptions
Years Interest rate 7%19

Description Unit
2025 2026–2044
Paydown time 20 years
EUA price USD/tCO2eq 100 100
Tank-to-wake CO2,
Emission scope CO2eq Tank-to-wake CO2
CH 4 , N 2O
EUA coverage of 70% of EU ETS 100% of EU ETS

%
EU ETS emissions emissions emissions
TABLE A-4
CAPEX, energy reduction potential, and reward factor assumptions
Reduction in energy Reward factor for

Technology for CAPEX Increase in Delta CAPEX
use relative to wind-assisted
the case vessel (MUSD) CAPEX (%) (MUSD)
baseline design (%) propulsion (–)
Conventional MGO-fuelled 36 – – – –
Energy-efficiency measures
(hull form optimization, air
– 11% 4 9% –
lubrication system, and shaft
generator)
2 × Flettner rotor sails

– 14% 5 10% 0.95
(WAPS)
LNG – 25% 9 – –
Methanol – 14% 5 – –
Ammonia – 25% 9 – –
Shore power - 3% 1 - -
48
Endnotes Fuel EU MARITIME
Endnotes
1 For more information, see Fit for 55 - The EU’s plan for 12 More information on fuel availability and
a green transition - Consilium (europa.eu). infrastructure can be found on DNVs Alternative Fuels
Insight platform: https://afi.dnv.com/
2 The DNV Maritime Forecast to 2050 report can be
downloaded here: Maritime Forecast to 2050 by DNV 13 The ISM Company means the owner of the ship
or any other organization or person such as the
3 The formula is simplified. The full formula for
manager, or the bareboat charterer, who has
calculating the GHG intensity can be found in Annex I
assumed the responsibility for operation of the ship
in the FuelEU Maritime Regulation: https://eur-lex.
from the owner of the ship and who on assuming
europa.eu/eli/reg/2023/1805
such responsibility has agreed to take over all
4 Annex I of the FuelEU Regulation refers to the the duties and responsibilities imposed by the
Renewable Energy Directive (Directive (EU) International Safety Management Code.
2018/2001) where the GWP values are stated.
14 Directive 2003/87/EC
Note that the EU Commission has indicated that it is
planning to update the values in early 2025 to 28 for 15 Article 30 of Directive (EU) 2018/2001 of the
CH4 and 265 for N2O, aligned with the GWP values European Parliament and of the Council of 11
used for MRV and ETS. December 2018 on the promotion of the use of
energy from renewable sources.
5 The nine outermost regions of the EU are: Azores,
Madeira, Canary Islands, Guadeloupe, French 16 Guidance document No. 1: The EU ETS and MRV
Guyana, Martinique, Mayotte, Saint Martin, and Maritime General guidance for shipping companies.
Reunion. https://climate.ec.europa.eu/eu-action/transport/
reducing-emissions-shipping-sector/faq-monitoring-
6 Directive (EU) 2018/2001 of the European Parliament
reporting-and-verification-maritime-transport-
and of the Council of 11 December 2018 on the
emissions_en
promotion of the use of energy from renewable
sources. RFNBOs and RCFs would typically be e-fuels 17 The well-to-wake GHG intensity factors are based
made from hydrogen produced from renewable on default values given in Annex II (REGULATION
energy sources. RCF can include carbon from liquid 2023/1805).
or solid waste streams of non-renewable origin which
18 Calculated as weighted average. We assume that
are not suitable for material recovery. Over time, the
vessels applying methane as fuel use main engine
carbon sources that can be used for producing RCF
categorized as LNG diesel (dual-fuel slow speed),
will become more restricted.
and auxiliary engines as LNG Otto (dual-fuel medium
7 Directive (EU) on common rules for the internal speed).
markets for renewable gas, natural gas and hydrogen,
19 https://www.shipuniverse.com/breaking-down-the-
amending Directive (EU) 2023/1791 and repealing
numbers-maritime-finance-explained/
Directive 2009/73/EC (recast). This would typically
be so-called blue fuels which are made from fossil
feedstocks with capture and storage of CO2 emitted
during production.
8 MEPC.1/Circ.896: 2021 Guidance on treatment

of innovative energy efficiency technologies for
calculation and verification of the attained EEDI
and EEXI.
9 Note that this is a simplified version of the

compliance balance formula. The full formula
can be found in Annex IV in the FuelEU Maritime
regulation: Regulation - 2023/1805 - EN - EUR-Lex
(europa.eu).
10 An implementing Act defining what can be considered

zero-emission technologies is under development and
expected to be published in early 2025. Photo credits
11 A map of the TEN-T core maritime ports can be found IMO (CC BY 2.0/imo.un): 47 | Odfjell: 12 | Ports
here: https://webgate.ec.europa.eu/tentec-maps/ of Stockholm: 19 | Shutterstock: 1, 2, 5, 6, 11, 17,
web/public/screen/home 20–32, 35, 40, 42, 44, 45, 50 | Stena Rederi: 37
49
Fuel EU MARITIME DNV services
50
DNV services Fuel EU MARITIME
How DNV can help

DNV offers a comprehensive range of services, information
portals and learning opportunities to support you in selecting
the best strategy for your vessels.
Technical and
Regulatory News
dnv.com/maritime/technical-
Decarbonization hub
regulatory-news dnv.com/decarbonization
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dnv.com/webinars dnv.com/ec
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Publications Advisory services

dnv.com/mp dnv.com/advisory
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ABOUT DNV
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FUELEU MARITIME

Requirements, compliance strategies,

Ola Gundersen Skåre Øyvind Endresen

EXECUTIVE SUMMARY 4 3.3.1 Borrowing compliance balance 29

1 INTRODUCTION 6 3.3.2 Banking compliance surpluses 30

2.1.3 Reward factors 12 4.1 Roles and responsibilities 39

2.1.4 Exemptions 12 4.2 Managing compliance 40

2.1.5 Flexibility mechanisms 13 4.2.1 Responsible entity  40

2.1.6 Penalty 14 4.2.2 Administering state and national authority 40

2.2 Shore power requirement  14 4.3 Managing the commercial impact  41

2.3 RFNBO requirement 4.3.1 ISM company 41

(possibly applicable from 1 January 2033) 14 4.3.2 Shipowners and charterers 41

2.4 Monitoring, reporting, and verification  15 4.3.3 Bunker suppliers 44

2.5 Review 15 4.4 Data management in daily operations 45

3 COMPLIANCE STRATEGIES 16 5 STATUS OF IMO REGULATORY

Financial impact of compliance strategies

Chapter 2 Chapter 3 Chapter 4 Chapter 5

2.1 GHG intensity requirement

Extraction/ Processing and Transport and Combustion/

2025–2029 2030–2034 2035–2039 2040–2044 2045–2049 2050 ©DNV 2024

Fossil fuels Default factors only

Sustainable and no Default or actual

Shore power Zero emission

Into EU EU port In EU EU port Out of EU

50% 100% 100% 100% 50%

Annual fuel Prioritized fuel Leg 1: Leg 5: Leg 2: Leg 3: Leg 4:

2.1.5 Flexibility mechanisms

| Compliance balance | [tCO2 eq] 2,400 [ €/tVLSFOeq] Consecutive periods – 1

2.2 Shore power requirement

2.3 RFNBO requirement (possibly applicable from 1 January 2033)

2.4 Monitoring, reporting, 2.5 Review

CONTENT KEY POINTS

• Energy-efficiency measures can

• Wind-assisted propulsion can

• Using shore power that improves

• Compliance pooling could be a tool

Case-study vessel and compliance strategies TABLE 3-1

Overview of FuelEU compliance strategies analysed in this study

We consider the annualized additional CAPEX relative to a conventional

This cost of purchasing EU emission allowances (EUAs) is calculated based on the

Included for compliance strategies involving FuelEU penalties

3.1 Pay penalty

Compliance strategy: Pay penalty

Case description and assumptions

Annual expenses (left) and well-to-wake GHG intensity (right)

24 100 Additional penalty*

16 Actual GHG intensity

0 0 *Due to consecutive period multiplier

Total cost (2025–2044): Accumulated compliance balance (2025–2044):

Compliance strategy: Pay penalty and use of energy-efficiency measures

Case description and assumptions

Annual expenses (left) and well-to-wake GHG intensity (right)

24 100 Additional penalty*

Annual GHG intensity (gCO2eq/MJ)

0 0 *Due to consecutive period multiplier

Total cost (2025–2044): Accumulated compliance balance (2025–2044):

3.2 Use fuels/energy with lower well-to-wake GHG intensity

Compliance strategy: Blend in bio-MGO

Case description and assumptions

Annual expenses (left) and well-to-wake GHG intensity (right)

EXECUTIVE SUMMARY 4 3.3.1 Borrowing compliance balance 29

1 INTRODUCTION 6 3.3.2 Banking compliance surpluses 30

2.1.3 Reward factors 12 4.1 Roles and responsibilities 39

2.1.4 Exemptions 12 4.2 Managing compliance 40

2.1.5 Flexibility mechanisms 13 4.2.1 Responsible entity 40

2.1.6 Penalty 14 4.2.2 Administering state and national authority 40

2.2 Shore power requirement 14 4.3 Managing the commercial impact 41

2.3 RFNBO requirement 4.3.1 ISM company 41

(possibly applicable from 1 January 2033) 14 4.3.2 Shipowners and charterers 41

2.4 Monitoring, reporting, and verification 15 4.3.3 Bunker suppliers 44

2.5 Review 15 4.4 Data management in daily operations 45

3 COMPLIANCE STRATEGIES 16 5 STATUS OF IMO REGULATORY

Compliance strategy: Blend in bio-MGO and use of wind–assisted propulsion