The legislation is a critical component of the EU’s ‘Fit for 55’ package, aimed at achieving a 55% reduction in net greenhouse gas (GHG) emissions by 2030 and climate neutrality by 2050.  

FuelEU Maritime sets stringent limits on the yearly average GHG intensity of energy used by ships above 5,000 gross tonnage calling at European ports, irrespective of their flag. These targets ensure a progressive reduction in the GHG intensity of fuels used, beginning with a 2% decrease by 2025 (from a 2020 baseline) and escalating to an 80% reduction by 2050. The regulation encompasses not only CO₂ emissions but also methane and nitrous oxide, evaluated on a well-to-wake basis.

To reduce air pollution in ports, passenger and container ships at berth or moored at the quayside must use onshore power supply (OPS) or alternative zero-emission technologies from 1 January 2030 onwards in ports covered under Article 9 of the Alternative Fuels Infrastructure Regulation (AFIR), and from 1 January 2035 in all EU ports that develop OPS capacity. Member states may choose to apply the obligation to ports not covered by Article 9 of AFIR, from 1 January 2030.

The European Commission described FuelEU as goal-based and technology-neutral, granting operators the flexibility to select fuels and technologies that align with ship-specific or operation-specific profiles. The regulation also includes various flexibility mechanisms, enabling existing fleets to identify suitable compliance strategies and rewarding early movers who invest in the energy transition.

There are multiple pathways for vessels to comply with FuelEU obligations. One approach is the consumption of lower-carbon fuels, such as biofuels. FuelEU Maritime promotes the use of waste-based biofuels, consistent with the EU Renewable Energy Directive II (RED II). In addition to used cooking oil methyl ester (UCOME) based biofuel blends like B30 and B24, the regulation encourages the development of bio-LNG, bio-methanol, and renewable fuels of non-biological origin (RFNBOs). An RFNBO usage sub-mandate is set to be introduced in 2034, but it may be revised if production has not sufficiently scaled up.

Meanwhile, vessels that achieve overcompliance can leverage their compliance surplus by forming pools to offset under-compliant vessels or by banking the surplus for future periods. This flexibility allows vessels within a pool to be collectively compliant as long as the overall GHG intensity limit is maintained.

Despite the strong incentives for behaviour change, vessels operators also have the option to pay a penalty for non-compliance. The penalty is set at €2,400/t of low-carbon fuel that should have been consumed.

Due to delays in incorporating the FuelEU Maritime Regulation into the European Economic Area (EEA) Agreement, its application will be delayed in Norway and Iceland. Consequently, Norwegian and Icelandic ports will be treated as third-country ports in a FuelEU context from 1 January 2025 until the regulation is included in the EEA Agreement. (The EEA extends the EU’s single market to Norway, Iceland and land-locked Liechtenstein.)

COP29 call to action on green shipping

In other marine decarbonisation news, at COP29 in Baku last year, global shipping industry leaders signed an agreement calling for accelerated action on zero-emissions fuel standards and investments.  

The call to action committed signatories to prioritising investment in hydrogen-derived fuels that reduce emissions and transition costs. The agreement garnered over 50 signatories. It included commitments from industry to decarbonise the maritime sector, aiming for at least 5% – and potentially up to 10% – of energy used in shipping to come from zero or near-zero emissions by 2030.

Looking ahead, the International Maritime Organization (IMO) is set to decide in April 2025 on a global fuel standard that will regulate GHG emissions intensity and a carbon pricing mechanism for the maritime sector.