Why Fuel EU penalties cannot be added up correctly.
A simple example why you should be careful to sum up Fuel EU penalties.
How to calculated Fuel EU penalty correctly
One of the difficulties with Fuel EU is that you cannot simply add up the penalties of several months. This page shows an example how the difference between two single months and the total differs.
The following table shows the calculation of 5000 mt MGO and 5000 mt HFO. The first two columns contain the calculation of the single fuel.
The third column contains the calculation as if both fuels would be used within one time period. As shown below, the sum of the penalties of the first two columns deviates from the (correctly) calculated resulting penalty.
Well-to-Tank (WTT)
This is the well-to-tank part.
| MGO Consumption (mt) | HFO Consumption (mt) | Resulting values |
| 5000 | 5000 | |
| MGO Consumption (g) | HFO Consumption (g) | |
| 5000000000 | 5000000000 | |
| CO2Equ WtT [g] | CO2Equ WtT [g] | |
| 14.4 | 13.5 | |
| LCV [MJ/g] | LCV [MJ/g] | |
| 0.0427 | 0.0405 | |
| Fuel Emission WTT [gCO2eq] | Fuel Emission WTT [gCO2eq] | Sum Fuel Emission WTT [gCO2eq] Note: This is the sum of the left two columns. |
| 3,074,400,000.00 | 2,733,750,000.00 | =5,808,150,000.00 |
| Energy [MJ] | Energy [MJ] | Sum of Energy [MJ] This is the sum of the left two columns. |
| 213,500,000.00 | 202,500,000.00 | =416,000,000.00 |
| WTT | WTT | Resulting WTT This value is calculated based on the values above. |
| 14.40 | 13.50 | 13.96 |
Tank to Wake (TTW)
This is the tank-to-wake part of the emissions.
| GWP CO2 | GWP CO2 | |
| 1 | 1 | |
| CF CO2 | CF CO2 | |
| 3.206 | 3.114 | |
| GWP CH4 | GWP CH4 | |
| 25 | 25 | |
| CF CH4 | CF CH4 | |
| 0.00005 | 0.00005 | |
| GWP N2O | GWP N2O | |
| 298 | 298 | |
| CF N2O | CF N2O | |
| 0.00018 | 0.00018 | |
| CO2Equ TtW | CO2Equ TtW | |
| 3.26089 | 3.16889 | |
| Fuel Emission TtW [gCO2eq] | Fuel Emission TtW [gCO2eq] | Sum of Fuel Emission TtW [gCO2eq] Note: This is the sum of the TtW CO2 equivalents according to the left two columns. |
| 16,304,450,000.00 | 15,844,450,000.00 | =32,148,900,000.00 |
| TtW | TtW | TtW The value is calculated on the values above. |
| 76.37 | 78.24 | 77.28 |
The GHG values
Based on the values above, the GHG values and the Penalties are calculated.
| GHG Actual | GHG Actual | GHG Actual The value is calculated on the values above. |
| 90.76745 | 91.74420 | 91.24291 |
| GHG Target 2025 | GHG Target 2025 | GHG Target 2025 |
| 89.34000 | 89.34000 | 89.34000 |
| Delta This value is the different between the target GHG and the GHG Actual above. | Delta This value is the different between the target GHG and the GHG Actual above. | Delta This value is the different between the target GHG and the GHG Actual above. |
| -1.42745 | -2.40420 | -1.90291 |
| Compliance Balance Calculated based on the figures above. | Compliance Balance Calculated based on the figures above. | Compliance Balance Calculated based on the figures above. |
| -304,760,000.00 | -486,850,000.00 | -791,610,000.00 |
| Penalty MGO Calculated based on the figures above. | Penalty HFO Calculated based on the figures above. | Penalty Calculated based on the figures above. |
| €196,541.94 | €310,630.40 | €507,854.77 |
The result: The sum deviates from the correct penalty
As you can see, the sum of the Penalty MGO and the Penalty HFO differs from the penalty that has been correctly calculated on the combined values. Even if the difference for different fossil fuels is marginal, it will be significant for combination of fossil and bio- or e-fuels.
| Penalty (correctly calculated) | €507,854.77 |
| Penalty MGO + Penalty HFO (incorrectly calculated) | €507,172.33 |
| Difference | €682.44 |
When calculating the correct Fuel EU penalty, it is not possible to sum up the penalties of e.g. each month to achieve the correct penalty for an entire year. The deviation is caused by the Fuel EU formulas and appears as soon as more than one fuel type is used within a reporting period. As long as you are using the same fuel type with the same emission factors, the deviation will be zero.
The deviation is increasing as different fuel types may have different emission factors. Especially, when using bio fuels, the yearly penalty may deviate significantly.
Note: This sample calculation is provided without guarantee. We strongly recommend that you consult the regulations and publications of the European Commission and the EU Member States.
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