As the maritime sector embarks on a transformative journey toward reducing greenhouse gas (GHG) emissions, the European Union’s updated Monitoring, Reporting, and Verification (MRV) Regulation and the newly introduced FuelEU Maritime Regulation represent critical pillars of the “Fit for 55” package. These measures aim to align the maritime industry with the EU’s ambitious climate neutrality goals by 2050. Below, we explore these regulations and their implications for shipping companies striving to balance environmental responsibility and operational efficiency.
What is the MRV Regulation?
Introduced in 2018, the MRV Regulation initially required shipping companies to monitor and report CO₂ emissions. The latest amendments, effective from January 1, 2024, expand the scope to include methane (CH₄) and nitrous oxide (N₂O), reflecting the EU’s commitment to addressing all major maritime GHG contributors.
The regulation applies to ships of 5,000 gross tons (GT) or more that call at ports within the European Economic Area (EEA). However, it excludes specific categories such as warships, naval auxiliaries, and ships not propelled by mechanical means.
To comply, shipping companies must:
- Update and submit a monitoring plan tailored to each vessel.
- Monitor fuel consumption and GHG emissions per voyage (or annually, in specific cases).
- Prepare and submit verified emissions reports annually through the THETIS-MRV platform.
Key Obligations and Responsibilities Under MRV
Monitoring Plans
Each vessel’s monitoring plan must reflect the specifics of its operations, fuel sources, and energy use. Plans must be updated and reassessed when there are significant changes, such as a change in fuel types or shipping company ownership. Companies must submit the updated plan, verified by an accredited verifier, to the relevant authority by April 1, 2024, or within three months of a ship’s first EEA port call.
Emissions Reporting
Starting in 2025, shipping companies must submit annual emissions reports for the preceding year by March 31. These reports, detailing voyage-specific and aggregate emissions, will help the EU track compliance and progress toward climate targets.
Compliance Responsibility
The entity responsible for EU ETS compliance also assumes responsibility under the MRV Regulation. This streamlined accountability ensures consistency in reporting and enforcement.
Introducing the FuelEU Maritime Regulation
Effective January 1, 2025, the FuelEU Maritime Regulation is designed to increase the adoption of renewable and low-carbon fuels across EU maritime operations. The regulation sets GHG intensity limits for energy used onboard ships and mandates the use of onshore power supply (OPS) or zero-emission technologies for certain vessel types in port.
GHG Intensity Targets
The GHG intensity of fuels is measured on a Well-to-Wake basis, encompassing the entire fuel lifecycle from production to consumption. Limits will tighten every five years, pushing the industry toward cleaner alternatives and penalizing non-compliance with excess GHG emissions thresholds.
Key Features of the FuelEU Maritime Regulation
Banking and Borrowing Flexibility
FuelEU introduces mechanisms that provide shipping companies with operational flexibility:
- Banking: Ships with surplus compliance (GHG savings exceeding the target) can carry it forward to future reporting periods.
- Borrowing: Ships with deficits can offset them by borrowing from future compliance, with restrictions to prevent habitual reliance on this mechanism.
Pooling Mechanism
Shipping companies can pool compliance balances across their fleets, optimizing resource management and minimizing penalties for individual ships. This mechanism underscores the importance of fleet-wide strategies for regulatory alignment.
Preparing for Compliance
Monitoring Plan Essentials for FuelEU
A robust monitoring plan is the foundation of compliance. It must include:
- Ship identification details (name, IMO number, company details).
- Fuel types and energy sources are used onboard.
- Procedures for monitoring fuel consumption and emissions throughout the fuel lifecycle.
- Specifications of OPS or zero-emission technologies, where applicable.
Updates to the monitoring plan are required whenever operational or fuel-related changes occur.
Reporting Requirements
FuelEU mandates that shipping companies report:
- Departure and arrival details for each voyage.
- Amounts of fuel consumed both at berth and at sea.
- Electricity is supplied through OPS where applicable.
Challenges and Opportunities
The MRV and FuelEU Maritime Regulations present both challenges and opportunities. Adherence to these requirements involves meticulous planning, monitoring, and reporting, which can strain resources for some operators. However, these regulations also incentivize innovation in alternative fuels and emissions-reducing technologies, fostering a sustainable maritime ecosystem.
VURDHAAN, as a trusted partner in the maritime sector, actively supports shipping companies in navigating these complexities. Through its tailored guidance on compliance, emissions tracking, and sustainability strategies, VURDHAAN helps operators align with evolving regulations while optimizing operational efficiency.
Implementation Timeline
Both MRV and FuelEU emphasize a phased approach to adoption:
- 2024: Expanded MRV requirements come into effect, requiring monitoring of CH₄ and N₂O in addition to CO₂.
- 2025: FuelEU Maritime Regulation becomes operational, introducing GHG intensity limits and OPS mandates.
- 2026 and Beyond: Progressive tightening of GHG intensity limits under FuelEU.
Conclusion
The MRV and FuelEU Maritime Regulations are not merely compliance requirements; they are catalysts for a greener future in maritime transport. By enforcing stringent GHG reporting and incentivizing the adoption of low-carbon fuels, these regulations position the EU as a global leader in maritime sustainability.
For shipping companies, the journey toward compliance is an opportunity to innovate, optimize, and lead in sustainability. With expertise in emissions regulations and tailored solutions, VURDHAAN is committed to supporting the maritime sector in achieving these ambitious goals.
Let us navigate this transformative journey together—one compliant voyage at a time.