The FuelEU Maritime Regulation is an EU initiative, effective from 1st January 2025, aimed at reducing greenhouse gas (GHG) emissions from ships operating within European waters. It is part of the broader EU Fit for 55 package, which seeks to cut EU emissions by at least 55% by 2030 and achieve climate neutrality by 2050.
What does FuelEU do?
The regulation sets limits on the carbon intensity of energy used by ships, meaning vessels must gradually reduce their emissions over time. This is done by:
- Requiring ships to use cleaner fuels (such as biofuels, LNG, or alternative energy sources).
- Introducing financial penalties for non-compliance if a vessel exceeds its allowed carbon intensity.
- Encouraging shore power usage to reduce emissions while ships are in port.
Who does it apply to?
- Ships over 5000 GT calling at EU ports, regardless of their flag.
- Shipowners, operators, and charterers, depending on how contracts allocate responsibility for fuel procurement and emissions.
Why is it important for charterers?
Although shipowners are primarily responsible for meeting FuelEU targets, charterers can face financial and operational risks if:
- They supply non-compliant fuel under a time charter.
- They are contractually responsible for additional compliance costs.
- They do not correctly allocate responsibilities in the charter party.
Charterers need to be aware of how FuelEU affects their contracts and liabilities, ensuring they do not take on unintended costs or exposure.
Understanding FuelEU risks for charterers: A practical breakdown
For commercial chartering professionals, FuelEU Maritime is not just another regulation. It’s a new cost and compliance factor that will directly impact chartering negotiations and day-to-day operations. While the legal aspects can be complex, the key risks for charterers can be broken down into three main areas:
1. Who pays for compliance?
FuelEU sets strict emission limits, but the regulation does not automatically say who is responsible for compliance. This creates a commercial risk in contracts between owners and charterers. Key questions:
- If a ship does not meet the FuelEU targets, who pays the penalties?
- If cleaner fuels are required, who covers the extra costs?
- If the ship needs additional emissions reporting, who takes on the administrative burden?
Without clear contract terms, a charterer could end up paying unexpected charges.
2. Fuel & bunkering risks
Many charterers arrange their own bunkers in time charters. But under FuelEU, if the fuel is non-compliant, the shipowner might claim damages or refuse to use the fuel. This means:
• Charterers must double-check bunker quality clauses in their contracts.
• A mistake in fuel supply could lead to heavy costs and disputes.
3. Fines & disputes
FuelEU includes fines for non-compliance, which could be passed down through contracts. If there is no clear agreement on who takes responsibility, this could lead to:
- Legal disputes between owners and charterers.
- Financial losses due to unexpected claims.
- Operational delays if compliance issues arise.
How can charterers reduce their risk?
- Check your charter party clauses. Ensure FuelEU-related costs and responsibilities are clearly allocated.
- Monitor fuel quality and emissions closely. Be proactive in managing compliance to avoid surprises.
- Get expert advice. IMU helps charterers navigate these risks, ensuring they have the right insurance and contract protection.
By staying ahead of these risks, charterers can avoid costly disputes and protect their business from unexpected liabilities.
At IMU, we understand that offering Charterers Liability insurance is just one part of the equation. Beyond providing coverage, we focus on risk management, contractual clarity, and regulatory guidance. Our expert team is committed to helping clients understand, navigate, and mitigate risks associated with FuelEU.
How IMU supports charterers?
1. Risk analysis & preventive guidance
IMU helps charterers identify vulnerabilities in their charter parties before they translate into financial loss. We offer:
- Clause reviews to ensure compliance with FuelEU and allocate responsibilities fairly.
- Advisory services on best practices for emissions monitoring and reporting.
- Insights on new regulatory developments affecting chartering obligations.
2. Charterers liability insurance: more than just coverage
While insurance provides financial protection, IMU goes further by:
- Providing tailored policy solutions that align with emerging FuelEU risks.
- Supporting clients in claims handling to ensure swift and fair resolutions.
- Helping charterers integrate risk management into their operational framework.
3. Proactive claims & legal support
In the event of a FuelEU-related dispute, IMU’s legal and claims specialists provide:
- Expert representation in disputes over non-compliant fuel usage.
- Assistance in liability negotiations with shipowners and counterparties.
- Defense strategies against fines and penalties resulting from regulatory breaches.
Need expert guidance on FuelEU risks? IMU is here to help.
Click here to continue reading about Liability insurance in maritime logistics: risk management beyond coverage
