According to wind assisted propulsion system (WAPS) company bound4blue, the demands of FuelEU Maritime are great, the targets ambitious and the penalties significant, but the challenge can offer opportunity within.
FuelEU Maritime is described as a ground-breaking regulatory framework designed to reduce GHG emissions from the maritime industry. It differs from EU ETS in that EU ETS focuses on tank-to-wake emissions (fuel usage onboard), while FuelEU Maritime considers well-to-wake emissions, basically the entire fuel lifecycle. This creates a different impetus when selecting fuels – e.g. a biofuel that produces zero vessel CO2 emissions may ‘tick all the boxes’ for EU ETS, but could incur heavy penalties under FuelEU Maritime. That is the key difference.
FuelEU Maritime sets annual GHG intensity reduction targets for energy used by ships operating within the EU and European Economic Area (EEA). These targets are measured in grams of CO2 equivalent per megajoule (gCO2e/MJ) from a total extraction to consumption (well-to-wake) perspective. Starting from a baseline of 91.16g of CO2 per megajoule, the average well-to-wake GHG intensity in 2020, a relatively modest reduction target of 2% has been set for 2025. However, this climbs rapidly to 6% by 2030 and carries on accelerating all the way up to an 80% reduction by 2050.
The financial penalties for non-compliance ascend in line with the targets, which according to bound4ble makes it absolutely imperative for shipping companies to assess, and then adopt, compliant technologies as soon as possible. Delays in this process will be costly.
Cristina Aleixendri, COO bound4blue said: “Wind assisted propulsion systems (WAPS) offer a transformative solution for the industry to meet FuelEU Maritime requirements. By harnessing a proven, free and readily available green power to reduce fuel consumption and emissions, WAPS deliver powerful compliance and bottom-line benefits.”
One of the key advantages of WAPS lies in their ability to reduce a ship’s GHG intensity through the Wind Reward Factor (WRF). This device, incorporated into the calculation of emissions (GHG intensity = fwind x [WtT + TtW]), effectively relaxes targets for ships equipped with WAPS. Depending on the proportion of wind energy used for propulsion (Pwind/Pprop), the WRF ranges from 0.95 to 0.99. Put simply, this makes FuelEU Maritime compliance easier for vessels with WAPS than for those without.
Santiago Suárez, Ship Performance Manager at Lloyd’s Register, said, during a recent bound4blue webinar: “Users of wind assisted propulsion systems gain a double advantage under the new European regime. The initial benefit is that such solutions reduce fuel consumption and therefore the number of EU Allowances that need to be surrendered for each voyage under EU ETS. But a further reward is supplied by FuelEU Maritime, which offers up to a 5% reduction on the GHG intensity calculation of energy used onboard for those vessels where wind assisted propulsion accounts for 15% or more of the energy used for propulsion. In practical terms this means that a ship burning LFO in European waters would face a penalty of roughly 52€ per ton burnt. The same ship with a WAPS installation qualifying for the maximum reward factor, would not only save those 52€ per ton but also would bank an additional 72€ per ton in surpluses.”
bound4blue considers these savings to be potentially huge when applied across multiple vessels within a fleet.
Although FuelEU Maritime is now firmly on the industry’s radar, many shipping companies may be considering delaying strategic compliance decisions, choosing instead to pay penalties they may deem to be ‘manageable’. This could be potentially expensive because FuelEU Maritime penalties are not static. They escalate and compound over time, meaning that today’s small fines could turn into tomorrow’s insurmountable financial burdens. A short-term perspective carries real long-term risk.
Aleixendri said: “The earlier a company starts with compliance the better its understanding of fleet environmental performance and the more options it has for improvement. In the race for sustainability, those setting off today have a much better chance than a competitor – who has previously watched from the sidelines – trying to get up to speed from a standing start, without much training. Bearing that in mind, proactive adoption of solutions such as WAPS are an intelligent investment in long-term financial and operational stability.”
Through FuelEU Maritime’s ‘pooling’ and ‘banking’ facility, companies can group fleets together and average collective GHG intensity reductions. This allows the superior performance of some vessels — especially those equipped with WAPS,
Instead of outfitting every vessel with WAPS simultaneously, companies can focus on retrofitting selected ships, leveraging the pooled performance for compliance. And by avoiding fines through pooling, savings can be reinvested in future upgrades, creating a self-sustaining cycle of innovation and compliance. The banking feature offers companies the ability to store surplus GHG intensity reductions for future use, with no expiration date, providing a buffer against unforeseen challenges and ensuring long-term compliance.
Aleixendri concluded: “FuelEU Maritime is a wake-up call for shipowners operating in Europe, and a potential sign of things to come for a global industry transitioning away from carbon-intensive fuels. However, too much focus on the ‘stick’ of compliance makes it easy to lose sight of the ‘carrot’ of opportunity on offer here. Early WAPS movers can gain strong competitive advantage, adopting environmentally friendly innovations to achieve significant bottom-line advantages – both in terms of fuel and cost efficiencies (eSails can unlock double digit percentage savings), and dramatically reduced penalty costs. Those that choose to stand still today, paying penalties and biding time, may find themselves crippled by mounting costs in the future – making their businesses unsustainable in every sense of the word. Now is the time to set sail for greener, more profitable and compliant horizons.”
bound4blue’s FuelEU Maritime case study can be downloaded here.
Image: bound4blue eSails (source: bound4blue)
