Baltic Exchange launches FuelEU calculator to help shipowners understand the financial and commercial implications

From 1 January 2025, voyages that include port calls in the European Union will have to account for the new FuelEU Maritime regulation. This new regulation is designed to accelerate the uptake of renewable and low-carbon fuels in maritime transport to drastically reduce onboard greenhouse gas (GHG) emissions in Europe.

FuelEU Maritime is the latest regulation designed to help shipping’s decarbonisation journey. However, these types of emissions regulations are becoming increasingly complex and increasingly regional. Due to the sheer number of new regulations, tightening goals and deadlines, access to reliable data and insights to inform decision making is increasingly requested. Furthermore, the regulations may not consistently address the nuances of different trade patterns or vessel types, thereby introducing ambiguity which increases the uncertainty and challenges for the shipping industry.

In order for shipowners to better understand the financial costs, as well as the wider commercial impacts of complying with FuelEU Maritime, particularly when it comes to the specific regulations of their own fleets, what is needed is a clear market benchmark for defining good emissions performance. Crucially, this type of standard needs to come from a trusted source in the market. This is where Baltic Exchange and its Emissions Calculators have a vital role to play.

“While the latest emissions regulations are a net positive for the industry, there is a degree of ambiguity around what constitutes strong commercial performance in this evolving landscape. It all gets very real when you put dollar numbers on the penalties and fuel alternatives. What is needed right now is an clearer understanding of the commercial implications of the various regulations and how these will affect the operational decisions of shipowners,” said Martin Crawford-Brunt, Emissions Lead at Baltic Exchange.

“Baltic Exchange is offering market-related baselines to help educate and inform the market on the financial implications of the cost of emissions in freight for shipping players who need to factor them into their business decisions.

“This includes providing the means to calculate the cost and potential penalties of carbon emission regulations, such as EU ETS and FuelEU Maritime, so these can be included into voyage costs,” he added.

Baltic Exchange FuelEU Calculator

Launched earlier this year ahead of the regulation coming into force, Baltic Exchange’s Emissions Calculator now includes a specific FuelEU Maritime feature. This tool helps shipowners understand the potential cost implications for their vessels, while also enabling operators and charterers to evaluate whether they are being charged fairly. By offering insights based on Baltic standard ships and standard route data, it creates a win-win scenario for all parties involved.

This new tool provides a vital comparison for a vessel’s journey and fuel consumption, comparing standard low sulphur heavy fuel oil to other greener options such as LNG or methanol. By entering the vessel’s deadweight tonnage, type, speed and consumption against Baltic standard ship data, shipowners are able to quickly understand the potential financial penalties of operating that vessel on voyages which include EU port calls. This will enable the market them to factor these additional costs into the cost of freight, expressed in dollar per tonne, or the target time charter rate.

Only fossil-based variants of alternative fuels are included in the calculator, for the time being, as these will be available first and are expected to be more competitively priced, than green alternatives. The tool is set to include bio-fuel blends, for diesel and LNG, which have a known well-to-wake factor, in future updates.

For example, a 50,000 dwt MR tanker operating on the TC14 Baltic route (Houston – Amsterdam), assuming a VLSFO price of $600/tonne and MGO of $700/tonne, will face approximately $483,000 in fuel costs and a FuelEU Maritime penalty of $29,400 in 2025.

However, the calculator provides the option to quickly see the related costs if the vessel ran on LNG, methanol or ammonia. The example below is based on the default fuel price inputs, as follows - LNG $750/t, Methanol $1500/t and Ammonia $1200/t. The fuel prices can easily be changed by the user.

The benefit is that any decision maker can gain a quick overview of the cost implication associated with selecting various fuels for that voyage. The tables below demonstrate the importance of including the cost of FuelEU compliance as part of the decision making process for EU voyages.

In another example, a 180,000 dwt Capesize vessel operating on the C2 Baltic route (Tubarao – Rotterdam round voyage) would face a FuelEU Maritime penalty of $66,600 and a total fuel cost of $942,000. However, once again, the Baltic Exchange Emissions Calculator is able to showcase the differences costs for other fuel types, enabling users to have more decision-making capabilities to understand their voyage-related costs. All these figures are detailed below.

By using the Baltic Exchange Emissions Calculator to compare the cost of operating the same vessel on cleaner fuels, the market can quickly understand the financial implications of their choices and the need to mitigate their commercial and contractual risks.

“As a shipowner, you want to be sure you cover your voyage costs. This includes understanding the cost of complying with the new FuelEU Maritime regulation and who will pay for what to avoid being left holding the penalty,” Martin noted.