Argus Launches the First FuelEU Maritime Spot Price for Compliance Trading

(Argus Media/PR Newswire) Enables shipowners and charterers to optimise compliance decisions, reduce costs and monetise surplus positions -- Global energy and commodity price reporting agency Argus has launched the first FuelEU Maritime pooling spot price and bio-LNG abatement prices, bringing transparency to this rapidly growing compliance market.

The new market has been developed by market participants to meet obligations under the FuelEU Maritime regulation, which is in its second compliance year and requires ships of above 5,000 gross tonnage operating in EU waters to progressively cut greenhouse gas emissions. The current requirement is for a 2pc reduction in emissions compared with 2020 levels, increasing by stages to 80pc by 2050. Shipowners can meet this requirement by substituting fossil fuels with low-carbon fuels such as biodiesel, LNG and bio-LNG.

Alternatively, shipowners can meet their compliance needs by buying surplus compliance from other shipowners under the FuelEU Maritime's pooling flexibility mechanism. The mechanism allows shipowners to aggregate compliance across their fleets to meet the emissions reduction target. Any surplus compliance generated by emissions reductions in excess of the target can then be sold to shipowners who have a deficit.

The new Argus prices provide independent benchmarks for the cost of generating compliance and the price for trading it under FuelEU's pooling mechanism. This comparison enables shipowners and charterers to optimise compliance decisions, reduce costs and monetise surplus positions.

Daniel Gent, Marine Fuels Transition Lead at Soya Group, said: "FuelEU pooling has been a genuine incentive to switch fuels, but it has operated as a peer-to-peer market, with limited price transparency. Argus' new compliance price finally gives shipowners and charterers an independent benchmark to price pooling deals against."

The weekly FuelEU pooling spot price is the first market-led, fuel-agnostic price to pinpoint the value of traded compliance. This independent benchmark can be used by shipowners in bilateral pooling negotiations and for fixing contracts. Low-carbon fuel producers can also track the price to better understand the additional value their products can achieve under the FuelEU Maritime regulation.

The new bio-LNG abatement prices add to Argus' existing biodiesel abatement coverage for used cooking oil methyl ester (Ucome) and its new Dutch Advanced Fame abatement price. By comparing abatement prices across biodiesel and bio-LNG, shipowners and charterers can determine the most cost-effective fuel pathway to generate compliance, improve fuel purchasing decisions, streamline charterparties and better assess the commercial value of generating surplus for trading.

Argus Media chairman and chief executive Adrian Binks said: "We have developed these new compliance prices working closely with industry participants from across maritime sectors. There is a real need to provide independent benchmarks which help shipowners and charterers make decisions in planning and managing their compliance obligations."

All prices are published in €/t CO2 equivalent. The FuelEU pooling spot price is assessed and published weekly. Bio-LNG abatement prices are published weekly for subsidised waste and manure-based feedstocks. Dutch Advanced Fame and Ucome abatement prices are published daily. All abatement prices are published with and without a deduction for EU Emissions Trading System Allowances (EUAs).

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