The FuelEU penalty formula, derived line by line
Annex IV Part B of Reg. (EU) 2023/1805 is short, but the chain from gCO2eq-per-MJ to euros runs through three conversions a sponsor often misses. Here is each step.
TL;DR
FuelEU penalty = (greenhouse-gas-intensity deficit, in gCO2eq/MJ) × (energy used, in MJ) / (LCV of VLSFO, in MJ/t) / 41,000 × 2,400 €/t. We walk through each conversion factor and why it is what it is.
The FuelEU Maritime penalty formula sits inside Annex IV Part B of Regulation (EU) 2023/1805. Read literally, it produces a number in euros from a number in gCO2eq/MJ. The chain of conversions that connects the two is short but unforgiving: miss a unit and you are off by orders of magnitude. This note derives the chain step by step with the regulator citations attached.
Step 1 — the GHG-intensity deficit
Each vessel reports its average well-to-wake GHG intensity over the reporting year (gCO2eq/MJ) using the per-fuel carbon intensities in Annex II. The regulation specifies a yearly limit that ratchets down: 89.34 gCO2eq/MJ from 2025, falling to 65.13 in 2035 and further beyond.
The deficit is positive if the vessel exceeds the limit, zero or negative if it is in surplus. Surplus does not pay; deficit does.
Step 2 — multiply by total energy used
Deficit in gCO2eq/MJ multiplied by total energy consumed (MJ) gives total over-emission in gCO2eq. The total energy is summed across all energy carriers — heavy fuel oil, MDO, LNG, biofuels, shore power — using each fuel's lower calorific value from Annex II.
Step 3 — convert to tonnes VLSFO-equivalent
Annex IV Part B expresses the penalty in tonnes of VLSFO-equivalent. The conversion divides total over-emission (in g) by the LCV of VLSFO, which the regulation fixes at 41,000 MJ/t.
Step 4 — multiply by 2,400 €/t
The final multiplication is the headline penalty rate: €2,400 per tonne of VLSFO-equivalent of over-emission. The figure is set in Article 23(2). It does not adjust for inflation; the regulation will be amended if the Commission decides to raise it.
The full chain
Penalty (EUR) = deficit (gCO2eq/MJ) × energy (MJ) / 41,000 (MJ/t VLSFO) / 1,000,000 (g/t) × 2,400 (EUR/t)The two divisions can be combined into a single conversion constant — Provenship carries it as a named constant rather than burying it in the formula. The Annex IV Part B chain is two regulator articles and three unit conversions; every number in the chain is pinned to a JSON fixture against the regulator source.
Citations
Related notes