The FuelEU Maritime Regulation: Emission Reduction of Fuels in Shipping

As part of the European Union’s (EU) comprehensive ‘Fit for 55’ climate package, FuelEU Maritime (Regulation EU 2023/1805) operates since 1 January 2025 as a greenhouse gas (GHG) intensity-based mechanism within the EU’s maritime decarbonisation framework. While the EU Emissions Trading System (EU ETS) for maritime transport addresses the supply side by placing a price on absolute emissions (read our articles here and here), FuelEU Maritime is a complementary demand-side mechanism designed to promote the adoption of renewable and low-carbon fuels by setting progressively stricter GHG intensity targets for onboard fuel/energy use.

Regulatory framework

FuelEU Maritime applies to commercial vessels exceeding 5,000 gross tonnes (GT) that call at ports within the EU/European Economic Area (EEA), regardless of their flag. The regulation’s core mechanism comprises mandatory GHG intensity reduction targets measured against a 2020 baseline of 91.16 gCO₂eq/MJ, with progressive reduction requirements through reduction factors: 2% (2025), 6% (2030), 14.5% (2035), 31% (2040), 62% (2045), and 80% (2050). The regulation’s scope encompasses 100% of fuel consumption for voyages between two EU/EEA ports, 50% of fuel consumed during any journey between EU/EEA ports if one of the ports is located in an ‘outermost region’ and 50% of the fuel consumed between voyages to/from an EU/EEA port and a third country (Figure 1). The regulation prevents regulatory evasion by designating some non-EU container transhipment ports, such as Tanger-Med and East Port Said, counting as a “port of call”. The definition of a port of call excludes among others stops for non-commercial purposes such as refuelling, obtaining supplies, or drydocking.

Figure 1: Example illustration of the scope of the FuelEU Maritime with the 100/50% rule (source: carboneer)

A key feature of FuelEU Maritime is its Well-to-Wake lifecycle assessment. This comprehensive methodology accounts for the full emissions profile of a fuel; from its extraction or production (well) to its use on board a vessel (wake). This is in contrast to the EU ETS, which uses a Tank-to-Wake approach. FuelEU Maritime covers, besides carbon dioxide (CO₂), also methane (CH₄) and nitrous oxide (N₂O).

Flexibility mechanisms as strategic tools
Within the FuelEU Maritime framework shipping companies can use the flexibility mechanisms of banking, borrowing, and pooling. These are instruments that can be leveraged for long-term fleet optimisation and competitive advantage.

Banking:If a vessel reduces its GHG intensity beyond the required target, the surplus can be “banked” for use in the following reporting period. This allows over-compliant vessels to build a strategic reserve for its compliance to offset future deficits as targets become more stringent.
Borrowing:A ship with a deficit can “borrow” up to 2% of the following period’s target, which must be paid back with an additional 10% penalty. Note that borrowing cannot be used two periods in a row, thus it is no long-term solution.
Pooling:This is the most innovative mechanism, allowing vessels to share their compliance balances. A modern, “green” vessel with a surplus can allocate its excess compliance to an under-compliant vessel in the same or a different fleet, making both compliant. This creates an emerging commercial exchange of compliance surpluses within private or brokered pooling arrangements, providing a return on investment for companies that over-comply.

If none of the above compliance methods are used to remove a compliance deficit, then a financial penalty must be paid. The penalties are 2,400 EUR per tonne Very Low Sulphur Fuel Oil (VLSFO) equivalent deficit, with VLSFO serving as the calculation reference due to its market dominance. Penalties increase progressively for consecutive non-compliance, creating penalty multipliers of 10%, 20%, 30% and so forth for persistent, yearly violations.

Onshore Power Supply and fuel incentives

FuelEU Maritime also introduces specific mandates for onshore power supply (OPS) and incentives for next-generation fuels. From 1 January 2030, container and passenger ships over 5,000 GT must connect to OPS when at berth for more than two hours in a Trans-European Transport Network (TEN-T) port. This requirement for container ships and passenger ships to connect to OPS will be further expanded from 1 January 2035 to all other ports where an OPS is available. Onshore power non-compliance incurs penalties of 1.50 EUR per unused kilowatt-hour, calculated against total electrical power demand during applicable berth periods. The regulation also provides a powerful incentive for Renewable Fuels of Non-Biological Origin (RFNBOs) by applying a 2x multiplier to their energy content in GHG intensity calculations until 31 December 2033 . This multiplier makes RFNBOs significantly more valuable for compliance and helps de-risk early investment in these fuels.

Annual compliance cycle

The compliance cycle follows structured timelines as outlined in Figure 2: Monitoring begins 1 January according to an approved monitoring plan and the FuelEU report must be submitted to accredited verifiers by 31 January of the year following the monitoring period. Should there be a change of company, a partial report should be verified within one month after the company transfer. Verifiers must complete verification and record results in the THETIS-MRV (platform and database for CO2 emissions from ships for compliance with EU regulations)by 31 March of the following year, followed by flexibility mechanism (banking, borrowing, or pooling) declarations by 30 April. By 30 June, a valid Document of compliance (DoC) must be obtained by the respective ship. If penalties are due, the DoC is only issued upon proof of payment. Importantly, if a ship is subject to FuelEU Maritime after 31 August 2024, a monitoring plan must be submitted to the verifier no later than two months after the first port call at a port falling under the regulation’s scope.

Figure 2: Compliance cycle in the FuelEU Maritime (source: carboneer)

THETIS-MRV platform integration and data management
THETIS-MRV is the European Maritime Safety Agency’s (EMSA) centralised IT platform serving as the single digital gateway for EU maritime environmental compliance. It integrates both EU ETS and FuelEU Maritime reporting and verification requirements through unified data submission while maintaining separate regulatory processing pathways. As illustrated in Figure 3, the platform connects distinct compliance processes: EU ETS follows ship-level monitoring through company-level reporting to allowance surrender, while FuelEU Maritime progresses from ship-level monitoring through flexibility mechanisms to penalty calculations.

Figure 3: THETIS-MRV for EU ETS Maritime and FuelEU Maritime (source: carboneer)

Unlike in the EU ETS, FuelEU Maritime uses GHG intensity-based compliance without tradeable allowances, with penalties automatically calculated by the TETHIS-MRV system. The platform enables operators to submit integrated datasets once, eliminating duplicate data entry while processing tank-to-wake calculations for EU ETS and well-to-wake assessments for FuelEU separately. Data accuracy becomes critically important because a single error in the shared dataset can negatively affect both EU ETS and FuelEU Maritime compliance.

Conclusion and recommendations

The FuelEU Maritime regulation is a complex legislation that requires a strategic response. A failure to comply exposes companies to significant financial and operational risks.

For ISM (International Safety Management) companies in the maritime sector the legal responsibility is non-transferable. ISM companies must secure contractual rights and financial guarantees from shipowners to cover potential penalties and compliance costs. The development and implementation of new contractual clauses are not optional but essential for risk management.
Shipowners must ensure that charter party agreements contain robust, updated clauses that transfer financial responsibility for FuelEU penalties to the charterer who controls fuel selection and trading. This is a critical step in aligning risk with control.
For charterers the fuel choice is now a strategic financial decision. Investing in or procuring low-carbon fuels and leveraging flexibility mechanisms like pooling are essential for maintaining long-term competitiveness and avoiding financially burdensome penalties.

Authors: Florian Schlennert, Simon Göß

Sources:

Regulation (EU) 2023/1805, 2023, Official Journal of the European Union, URL: https://eur-lex.europa.eu/eli/reg/2023/1805/oj/eng
Britannia P&I, 2024, FUEL EU MARITIME REGULATIONS, URL: https://britanniapandi.com/wp-content/uploads/2024/11/FUEL-EU-MARITIME-REGULATIONS.pdf
DNV, 2024, FuelEU Maritime Compliance, URL: https://www.dnv.com/maritime/insights/topics/fueleu-maritime/compliance/
BIMCO, 2024, FuelEU Maritime Clause for Time Charter Parties 2024, URL: https://www.bimco.org/contractual-affairs/bimco-clauses/current-clauses/fueleu-maritime-clause-for-time-charter-parties-2024/
NOW GmbH, 2023, Factsheet FuelEuMaritime Oktober 2023, URL: https://www.now-gmbh.de/wp-content/uploads/2023/10/NOW_Factsheet_FuelEuMaritime_Oktober-2023.pdf
DNV, 2024, FuelEU Maritime: How to prepare for compliance, URL: https://www.dnv.com/news/2024/fueleu-maritime-how-to-prepare-for-compliance/#:~:text=The%20FuelEU%20Maritime%20GHG%20intensity%20requirements%20apply%20to%20100%25%20of,Responsible%20shipping%20company
BetterSea, 2024, Ice Class and FuelEU Maritime: Navigating Compliance in Harsh Conditions, URL: https://www.bettersea.tech/post/ice-class-and-fueleu-maritime
BetterSea, 2024, FuelEU Compliance Timeline, URL: https://www.bettersea.tech/post/fueleu-compliance-timeline
DNV, 2024, EU ETS – Role of data for handling the EU ETS, URL: https://www.dnv.com/maritime/insights/topics/eu-emissions-trading-system/role-of-data-for-handling-the-eu-ets/
SAFETY4SEA, 2025, Focus in maritime decarbonization: The current regulations and challenges at a glance, URL: https://safety4sea.com/focus-in-maritime-decarbonization-the-current-regulations-and-challenges-at-glance/
European Commission, 2024, Questions and Answers on Regulation (EU) 2023/1805, URL: https://transport.ec.europa.eu/transport-modes/maritime/decarbonising-maritime-transport-fueleu-maritime/questions-and-answers-regulation-eu-20231805-use-renewable-and-low-carbon-fuels-maritime-transport_en
DNV, 2024, External Webinar FuelEU EU-ETS 12Dec2024, URL: https://ppl-ai-file-upload.s3.amazonaws.com/web/direct-files/attachments/79905583/4a690ecc-5925-49ef-8248-4d314667808a/DNV_Webinar_FuelEU_EU-ETS-12Dec2024.pdf
EMSA, 2024, Webinar FuelEU 04 June – General Process, URL: file:///C:/Users/FlorianSchlennertcar/Downloads/Webinar%20FuelEU%2004%20June_EMSA%20-%20General%20Process%20(1).pdf