Regulatory update: FuelEU Maritime

The Regulation in summary

The FuelEU Maritime Regulation (Regulation (EU) 2023/1805) (the “Regulation”) was implemented on 1 January 2025 by the European Commission and forms part of the “Fit for 55” package which aims to reduce the European Union’s emissions by at least 55% by 2030. The Regulation (as currently implemented) sets targets for vessels over 5,000 gross tonnes arriving at, and leaving, ports in the European Union to reduce greenhouse gas (“GHG”) intensity of energy used on board. These targets increase in five-year increments, up to an 80% reduction in GHG intensity by 2050.

The Regulation imposes various reporting requirements for vessel owners to log certain information in a central database, such as:

• Dates and time for arrivals and departures at EU including the duration of stay at berth;

• Fuel consumption at berth and at sea;

• Amount of electricity received;

• Well-to-Tank and Tank-to-Wake for each fuel type, encompassing all GHGs;

• Amount of substitute energy consumption at berth and sea;

• Ice class and voyages in ice conditions; and

• Providing an annual ‘FuelEU report’,

and provides for the payment of a surcharge if targets are not met.

Fuel use at berth

From 1 January 2030, a further requirement applies for passenger and container vessels to be capable of taking their electricity at berth from on-shore power supply (“OPS”), or alternative zero-emission technologies, in ports covered under Article 9 of the Alternative Fuels Infrastructure Regulation. From 1 January 2035, such vessels must be able to use OPS in all EU ports with OPS capacity.

The Regulation adds to an ever-growing regulatory framework, aimed at tackling climate change, alongside initiatives such as the Carbon Intensity Indicator (CII) and the European Union Emissions Trading Scheme (EU ETS).

Borrowing, banking and pooling

The Regulation sets out the basis for the calculation of a vessel’s ‘compliance balance’, established by reference to the vessel’s yearly average GHG intensity of energy used on board. At the end of the period, a vessel may have either a compliance surplus or a compliance deficit.

Article 20 of the Regulation permits a vessel’s compliance surplus to be ‘banked’ to the same vessel’s compliance balance for the following reporting period (1 January to 31 December), meaning that if the vessel is in deficit during the subsequent period, the surplus can be offset against the deficit. A company may also borrow an advance compliance surplus of the corresponding amount from the following reporting period to bring the vessel out of deficit, however a surcharge is likely to apply.

Article 21 of the Regulation permits ‘pooling’ of the sum of two or more vessels’ compliance balances if the total pooled compliance balance is positive. The pool surplus can be allocated between individual vessels. Vessels subject to a pooling agreement can be owned by one entity or by multiple entities.

All banking and pooling arrangements must be verified and recorded in the FuelEU database. 

BIMCO FuelEU Maritime Clause for Time Charterparties 2024

As explained above, the aim of the Regulation is to provide measurable targets for those involved in the shipping industry, in order to reduce GHG intensity and usage in general. This has obvious implications, in the first instance for vessel owners and operators calling at EU ports, who will need to meet the targets or face penalties for non-compliance.

Where owners and (time) charterers wish to contract on terms that the costs and benefits incurred in complying with the Regulation should be shared, a good starting point is BIMCO’s ‘FuelEU Maritime Clause for Time Charter Parties 2024’ (the “BIMCO Clause”).

The BIMCO Clause contains provisions that address, among other things:

• The obligation on the vessel to comply with the Regulation and owners’ obligation to disclose relevant information to charterers at the beginning of a charterparty;

• Owners’ obligation to monitor and report the vessel’s compliance, and to periodically update charterers;

• Charterers’ rights and obligations in relation to the bunkers they stem under the charterparty;

• The terms on which any penalty or surcharge should be calculated, passed onto Charterers and paid;

• Borrowing, banking and pooling of any compliance balance;

• The possibility of agreeing liquidated amounts to which either party is entitled, in the event of a positive or negative compliance balance at the end of a reporting period; and

• For charterparties extending beyond 2030, a term pursuant to which owners are obliged to ensure the vessel is capable of connecting to an onshore power supply when berthed.

Practical considerations

While the BIMCO Clause provides a good starting point for any parties negotiating a time charter, careful consideration is required on a case-by-case basis in order to ensure the agreed position covers as many eventualities, with as much clarity, as possible. For example:

• It is important to make sure that the clause is consistent with the rest of the charterparty. Consideration should be given to other clauses, including provisions relating to the specification of bunkers to be stemmed by Charterers and consideration of the specification of any bunkers remaining on board at delivery.  The vessel’s speed and performance is also relevant and may affect compliance with the Regulation and the parties’ capacity to comply with the BIMCO Clause. 
• The BIMCO Clause does not expressly provide for a scenario where a compliance deficit arises through owners’ breach of charter (e.g. a failure by the vessel to meet any performance warranty in the charterparty) or  grapple with a scenario where two or more variables may contribute to non-compliance, one of which sits with owners (e.g. vessel efficiency) and one with charterers (e.g. the quality of bunkers stemmed). 
• Whereas the clause is fairly clear regarding the circumstances in which owners are entitled to recover any surcharge from charterers, it is less clear about the circumstances in which charterers are entitled to cash recompense from owners in the event of a surplus in compliance balance.
• The BIMCO Clause provides for banking and pooling to be available to charterers where the charter period covers a complete reporting period (i.e. calendar year) only. The parties may wish to adjust this provision to extend the availability of banking and pooling to shorter periods as well, or to include alternative provisions providing for a cash benefit in the event of a compliance balance at the end of a defined period.
• Sub-clause (h) of the BIMCO Clause entitles owners to suspend performance of all obligations under the charterparty on 5 days’ notice, in the event of failure by charterers to pay any surcharge on time. This gives rise to the potential for disputes, in circumstances where suspension of service is threatened or effected and liability for the surcharge in question remains in dispute.

We can assist with further advice on these issues and others arising in relation to the Regulation and the BIMCO Clause, and with making any amendments to charterparty terms to reflect the intentions of the parties.