Wind-assisted propulsion under FuelEU Maritime: why the calculation deserves a closer look

Wind-assisted propulsion is usually discussed as a straightforward efficiency measure. The vessel consumes less fuel, emissions decrease, EU ETS exposure is reduced, and the FuelEU Maritime GHG intensity calculation benefits from the regulatory reward factor for wind assistance. From a technical and environmental perspective, the direction of travel appears clear. From a commercial FuelEU perspective, however, the calculation is more nuanced.

The reason is that the compliance balance under FuelEU Maritime is majorly affected by the amount of energy used on board. This creates an interaction that is easily overlooked: wind-assisted propulsion may reduce the vessel’s GHG intensity, but it also reduces fuel consumption and therefore the energy on which a surplus or deficit is calculated.

For vessels using conventional fuels that remain in deficit, this interaction is usually directionally aligned. Lower fuel consumption reduces the negative exposure, and the wind reward factor improves the GHG intensity position. For vessels using fuels that already generate a FuelEU surplus, such as LNG or biofuel blends, the effect requires closer analysis. Less fuel consumption also means that there is less fuel generating surplus. Whether the regulatory reward factor and the physical fuel savings compensate for this smaller energy base depends on the specific vessel, fuel, engine type, fuel price, EU ETS price and surplus value. Therefore, one has to avoid simplified assumptions and look more closely at how the FuelEU calculation is structured.

Wind-assisted propulsion under FuelEU Maritime: The regulatory interaction

Under FuelEU Maritime, wind-assisted propulsion is recognised through a reward factor applied in the GHG intensity calculation. This can improve the vessel’s FuelEU status because the reported GHG intensity is reduced.

At the same time, wind-assisted propulsion reduces the vessel’s fuel consumption. This is commercially positive because it lowers fuel costs and reduces EU ETS exposure. However, when calculating FuelEU compliance balance, the amount of energy used is highly relevant. A vessel that consumes less fuel has a smaller energy base on which the difference between the applicable GHG intensity target and the vessel’s actual GHG intensity is applied.

This is where the commercial tension may arise. If the vessel is in deficit, reducing fuel consumption normally reduces the amount of negative compliance balance generated. If the vessel is in surplus, reducing fuel consumption can also reduce the amount of positive compliance balance generated. The wind reward factor may more than compensate for that reduction, but this should be tested rather than assumed.

Case study 1: LNG vessel with and without sails

Consider an LNG-fuelled vessel where 50% of the annual consumption is within FuelEU scope. In the wind-assisted case, the vessel consumes 3,500 tonnes of LNG in scope, reflecting a 10% reduction in fuel consumption due to the sails. The ratio between wind propulsion power and propulsion power is 0.15. The assumed EU ETS price is EUR 80 per tonne CO2e, the FuelEU surplus value is EUR 120 per tonne CO2e, and the LNG cost is EUR 759 per tonne.

In this case, the vessel with sails has total fuel costs of EUR 2,656,500 and EU ETS costs of EUR 792,286. It generates FuelEU revenue of EUR 351,813. The resulting total OPEX is EUR 3,096,973.

The comparison case is the same LNG vessel without sails. Without the 10% reduction in fuel consumption, in-scope LNG consumption increases to 3,888 tonnes. Fuel costs increase to EUR 2,950,992 and EU ETS costs increase to EUR 880,116. FuelEU revenue is EUR 303,671. The resulting total OPEX is EUR 3,527,437.

The difference is material. In this example, wind-assisted propulsion improves the total economic position by EUR 430,464. The improvement is driven by three effects: lower fuel consumption, lower EU ETS exposure, and higher FuelEU surplus revenue due to the wind reward factor improving the vessel’s GHG intensity.

This result is important because it shows that the smaller energy base does not necessarily undermine the business case for wind-assisted propulsion. In this case, the reward factor and cost savings more than compensate for the lower fuel consumption volume.

Case study 1: Bio blend vessel with and without sails

The same interaction can be observed in a Bio blend scenario.

Consider a vessel using a B24 blend, consisting of HFO and Bio100 with an assumed 80% reduction. In the wind-assisted case, the in-scope consumption is 2,800 tonnes of HFO and 672 tonnes of Bio100, again reflecting a 10% fuel consumption reduction due to sails. The assumed EU ETS price is EUR 80 per tonne CO2e, the FuelEU surplus value is EUR 120 per tonne CO2e, the Bio24 costs are EUR 1,100 per tonne.

In this case, the vessel with sails has total fuel costs of EUR 3,075,000 and EU ETS costs of EUR 708,534. It generates FuelEU revenue of EUR 243,441. The resulting total OPEX is EUR 3,540,093.

Without sails, the same vessel consumes 3,111 tonnes of HFO and 747 tonnes of Bio100 within scope. Fuel costs increase to EUR 3,423,000 and EU ETS costs increase to EUR 787,232. FuelEU revenue decreases to EUR 198,814. The resulting total OPEX is EUR 4,011,418.

The wind-assisted case is therefore EUR 471,325 better than the non-wind-assisted case. The improvement consists of EUR 348,000 in lower fuel costs, EUR 78,698 in reduced EU ETS costs, and EUR 44,627 in additional FuelEU revenue.

Again, the result is not driven by one factor alone. The economic improvement results from the combined effect of lower fuel consumption, reduced emissions exposure and a better FuelEU GHG intensity due to the wind reward factor.

An unintended feature of the FuelEU Maritime Regulation

The case studies show that wind-assisted propulsion improves the commercial outcome under the assumptions used but also underlines that a case-specific calculation should be performed before investment. The outcome should not obscure the more important regulatory point.

The way the FuelEU compliance balance is calculated creates a counterintuitive effect for surplus-generating vessels. In other words, the vessel becomes more efficient, but part of the commercial FuelEU benefit is reduced because less energy remains available to generate surplus.

This is particularly relevant for wind-assisted propulsion because the FuelEU Maritime regulation expressly recognises it through a reward factor in the GHG intensity calculation. The policy intention appears clear: vessels using wind-assisted propulsion should benefit from a lower reported GHG intensity. Yet, where the same technology also reduces fuel consumption, the value of that regulatory reward is partly diluted by the reduction in the energy base.

This is unlikely to be the intended policy outcome. A technology that reduces fuel consumption and improves GHG intensity should not see part of its regulatory reward reduced because it is successful in reducing energy demand. The issue is not that wind-assisted propulsion performs poorly in the examples analysed above. It does not. The issue is that the formula creates an internal tension between rewarding lower intensity and calculating surplus on the basis of remaining energy consumption.

Importantly, this phenomenon is not limited to wind-assisted propulsion. It applies to energy efficiency measures more generally where a vessel is already generating surplus. Hull improvements, propulsion efficiency measures, route optimisation, air lubrication or other fuel-saving technologies may all reduce the energy base on which positive compliance balance is calculated. The more efficient the surplus-generating vessel becomes, the less energy remains available to generate surplus.

This does not mean such measures are commercially unattractive. Fuel savings and EU ETS reductions may still produce a strong business case. It does, however, mean that FuelEU does not always reward efficiency measures in a straightforward way. For surplus-generating vessels, the FuelEU Maritime regulation may partially offset the compliance value of efficiency by reducing the volume on which surplus is calculated. This is a point that regulators should review.

Why the result should not be generalised

The case studies show a positive business case for wind-assisted propulsion under the assumptions used. They should not, however, be generalised without modelling.

If the analysis only considers fuel savings, it misses the FuelEU reward factor. If it only considers GHG intensity, it misses the reduced energy volume. If it only considers FuelEU surplus revenue, it misses the EU ETS effect and the direct reduction in fuel costs. A correct assessment requires all three layers to be calculated together.

This is particularly relevant for vessels that are close to the FuelEU target or generate surplus through LNG, biofuel blends or other lower-emission fuels. In such cases, relatively small changes in GHG intensity, fuel consumption, fuel price, surplus value or EU ETS allowance price can materially affect the outcome.

EU ETS and FuelEU Maritime should not be separated

The EU ETS effect is also important. A reduction in fuel consumption reduces emissions subject to EU ETS, and therefore reduces allowance costs. In the LNG example, EU ETS costs decrease by EUR 87,830. In the Bio blend example, the reduction is EUR 78,698. These are direct and relatively intuitive benefits of lower fuel consumption.

FuelEU is less intuitive because the result depends not only on lower emissions but on the relationship between GHG intensity, energy consumption and the target. The same reduction in fuel consumption that lowers EU ETS exposure also changes the FuelEU compliance balance. This is why EU ETS and FuelEU should not be assessed in isolation when evaluating efficiency technologies.

For investment decisions, the relevant question is how the reduction in fuel consumption interacts with EU ETS savings, FuelEU surplus generation and the regulatory reward factor.

Conclusion

Wind-assisted propulsion is rightly treated as an important decarbonisation measure for shipping. Under FuelEU Maritime, it can also improve the vessel’s regulatory position through the wind reward factor. However, its commercial impact is not captured by the reward factor alone.

The key point is that for surplus-generating fuels, the energy sensitivity of the FuelEU Maritime regulation creates a counterintuitive interaction that should be modelled carefully.

In both cases analysed above, wind-assisted propulsion improves the overall result materially. For the LNG vessel, total OPEX decreases by EUR 430,464. For the Bio blend vessel, total OPEX decreases by EUR 471,325. These outcomes are supported by lower fuel costs, reduced EU ETS exposure and higher FuelEU revenue.

The conclusion is therefore not that wind-assisted propulsion is commercially unattractive. The conclusion is that under FuelEU Maritime, efficiency measures must be evaluated through their combined impact on fuel costs, EU ETS exposure and compliance balance. Only then can the real commercial value be understood.