# Fuel EU

Fuel EU Maritime introduces regulations to reduce greenhouse gas (GHG) emissions from ships over 5,000 gross tonnage that visit European ports. Starting in 2025, the GHG intensity of the fuels ships use must decrease by 2%, progressing to an 80% reduction by 2050. These rules apply to emissions not only from CO2 but also from methane and nitrous oxide, considering the entire lifecycle of the fuels, known as the Well-to-Wake (WtW) approach. This initiative aims to make the shipping sector greener over time (see more on [European Commision](https://transport.ec.europa.eu/transport-modes/maritime/decarbonising-maritime-transport-fueleu-maritime_en)).

A strict compliance penalty is applied if the target GHG intensity is not met.&#x20;



Calculation of the penalty goes as follows:

Step 1: Calculate the GHG Intensity.



<figure><img src="https://content.gitbook.com/content/Tiyan8mQCJc6UrGHwouE/blobs/nW8s88TSxu0oMIOnL9Gk/ghg.png" alt=""><figcaption><p>Source: <a href="https://www.bettersea.tech/post/guide-how-to-calculate-fueleu-maritime-penalties">https://www.bettersea.tech/post/guide-how-to-calculate-fueleu-maritime-penalties</a></p></figcaption></figure>

*   &#x20;mfuel = Fuel consumption per fuel type (in grams)


*   LCVfuel = Lower calorific value per fuel type (in MJ/g fuel)&#x20;

    * See current value in Bunker Categories module (Master Data -> Bunker Categories)


*   EFWtT = Well-to-Tank emission factor per fuel type (in g CO2e / MJ)

    * See current value in Bunker Categories module (Master Data -> Bunker Categories)


*   EFTtW = Tank-to-Wake emission factor per fuel type (in g CO2e / MJ)

    * See current TtW emission factor in Bunker Categories module (Master Data -> Bunker Categories)


* EElectricity = Electric consumption (in MJ)
  *   Electricity consumed during the voyage (if applicable)



#### Calculation breakdown:

For each bunker category consumption,

Step 1.1: Calculate total energy used.

Total energy used = Total EU ETS  consumption \* LCV \* 1,000,000





Step 1.2: Calculate WtT Emissions.

WtT Emissions = total energy used \* WtT factor





Step 1.3: Calculate TtW Emissions.

TtW Emissions = Total EU ETS consumption \* Ttw factor \* 1000000



Step 1.4: Calculate GHG intensity.

GHG intensity = (WtT emissions + TtW emissions) / total energy used





Step 2: Calculate the Compliance Balance.

$$
CB = ((GHG Intensitytarget - GHGIntensityactual)*(mfuel * LCVfuel+Eelectricity))
$$



Calculation breakdown

For each bunker category:

Step 2.1: Calculate Compliance Balance.

CB = (GHG intensity limit target - actual GHG intensity) \* total energy used&#x20;

GHG Intensity Limits varies every five years. Navigate to Master Data -> GHG Intensity Limits module to see the current values.&#x20;



Step 2.2: Convert Compliance Balance to CO2 equivalent.

Converted CB = ((GHG intensity limit target - actual GHG intensity) \* total energy used) / (actual GHG intensity / 1000000 \* 41000)





Step 3: Calculate the Compliance Penalty.



$$
CompliancePenalty = |CB| * Price
$$

Compliance penalties are calculated only when the compliance balance is negative. The penalty price defaults to the one set in System Preferences.



Compliance penalty can be seen in P\&L section. Penalty price is adjustable per voyage, and is always on EUR. As mentioned, the default penalty price is defined on the System Settings. During the calculation of voyage results, the penalty is converted to the voyage's currency.

<figure><img src="https://content.gitbook.com/content/Tiyan8mQCJc6UrGHwouE/blobs/kV9u6FHWPSraHVPNt7o7/image.png" alt=""><figcaption><p>Compliance Penalty on the P&#x26;L Summary</p></figcaption></figure>



***

#### Example voyage

<figure><img src="https://content.gitbook.com/content/Tiyan8mQCJc6UrGHwouE/blobs/Ly9Ocs48pq8FmpjeVqPe/image.png" alt=""><figcaption><p>Example voyage</p></figcaption></figure>

<figure><img src="https://content.gitbook.com/content/Tiyan8mQCJc6UrGHwouE/blobs/TjLvPPRvTWu4GP8ZMYfY/image.png" alt=""><figcaption><p>LS MGO bunker category drawer showing the factors used in the calculation</p></figcaption></figure>



Step 1: Calculate GHG Intensity.



Step 1.1: Calculate total energy used.

_Total energy used = Total EU ETS  consumption \* LCV \* 1,000,000_



The case voyage has 86.673 MT of LS MGO consumption. Yet considering the EU ETS Compliance figures, LS MGO consumption = 60.6711 MT.&#x20;

LS MGO has LCV 0.0427.



**Total energy used = 60.6711 \* 0.0427 \* 1,000,000 = 2,590,655.97**



Step 1.2: Calculate WtT Emissions.&#x20;

_WtT Emissions = total energy used \* WtT factor_&#x20;

LS MGO has WtT factor of 14.4

**WtT Emissions = 2,590,655.97 \* 14.4 = 37,305,445.97**



Step 1.3:  Calculate TtW Emissions

_TtW Emissions = Total EU ETS consumption \* TtW factor \* 1000000_

LS MGO has TtW factor of 3.2610

**Ttw Emissions = 60.6711 \* 3.2610 \* 1000000 = 197,848,457.1**



Step 1.4: Calculate GHG intensity.

_GHG intensity = (WtT emissions + TtW emissions) / total energy used_

**GHG Intensity for LS MGO = (37,305,445.97 + 197,848,457.1) / 2,590,655.97 = 90.77002342 g**





Step 2: Calculate Compliance Balance.&#x20;

Seeing the case voyage has voyage start year 2025, this is the GHG Intensity limit applied

<figure><img src="https://content.gitbook.com/content/Tiyan8mQCJc6UrGHwouE/blobs/X4Y3iQjnupfEgKRInf6o/image.png" alt=""><figcaption></figcaption></figure>

Step 2.1: Calculate Compliance Balance.

CB = (GHG intensity limit target - actual GHG intensity) \* total energy used&#x20;

**CB LS MGO= ((89.34 - 90.77002342) \* 2,590,655.97) / 1000000) \~ -3.705 gCO2eq/MJ**&#x20;



Step 2.2: Convert Compliance Balance to CO2 equivalent.

\= _(GHG intensity limit target - actual GHG intensity \* total energy used) / (actual GHG intensity / 1000000 \* 41000)_

**Converted CB =  -3.705 /  (90.77002342 / 1000000 \* 41000) \~ -0.996**



Step 3: Calculate the Compliance Penalty.

_Compliance penalty = Absolute value of Compliance balance \* Compliance penalty price_

Compliance penalty price is defaulted to the price on the System Settings.

<figure><img src="https://content.gitbook.com/content/Tiyan8mQCJc6UrGHwouE/blobs/n8Kq730Q7KqXnOYSW6P8/image.png" alt=""><figcaption></figcaption></figure>

<figure><img src="https://content.gitbook.com/content/Tiyan8mQCJc6UrGHwouE/blobs/RGfrymj44MOfvWAW2Ebd/image.png" alt=""><figcaption></figcaption></figure>

&#x20;

**Penalty = | -0.996 | \* 2400 EUR \~ 2 391 EUR**

<figure><img src="https://content.gitbook.com/content/Tiyan8mQCJc6UrGHwouE/blobs/Edycr9Pz7etBW50J60fO/image.png" alt=""><figcaption><p>Compliance penalty on P&#x26;L Summary</p></figcaption></figure>



