EU ETS and FuelEU Maritime: double compliance

What the two EU instruments are

Two EU instruments apply simultaneously to the same ships, on the same voyages, from the same MRV data source.

Directive (EU) 2023/959 extended the EU Emissions Trading System to maritime transport. It is a carbon-price instrument. A ship operator surrenders EU Allowances (EUAs) equal to its verified annual CO2-equivalent emissions by 30 September of the following year. The EUA price is whatever the secondary market clears at: it is market-discovered, not administratively set, and has traded between EUR 55 and EUR 100 per tonne CO2-equivalent in the 2024-2026 period. There is no fuel-type target, no intensity metric, and no fleet pooling. A ship burns a tonne of HFO and surrenders roughly 3.114 EUAs; if the EUA price is EUR 80, the cost is EUR 249.12 for that single tonne of HFO.

Regulation (EU) 2023/1805 created FuelEU Maritime. It is a fuel-intensity standard. A ship’s well-to-wake (WtW) gCO2eq/MJ figure for the year is compared against a declining annual trajectory target. The difference, weighted by energy consumed, produces a compliance balance in gCO2eq. A negative balance triggers a fixed penalty of EUR 2,400 per VLSFO-equivalent tonne of energy deficit. That EUR 2,400 rate is administratively set and fixed in the regulation; it does not move with any market. A ship running on pure fossil VLSFO in 2025 faces a gap of roughly 3.26 gCO2eq/MJ between its WtW intensity (~92.6 gCO2eq/MJ) and the 2025 target (~89.34 gCO2eq/MJ), converted to a penalty through the Article 23 formula.

The two instruments share one regulated population (ships of 5,000 GT and above on commercial voyages), one voyage geometry (100% intra-EEA, 50% extra-EEA, 100% at berth), one data pipeline (Regulation (EU) 2015/757 MRV amended by Reg. 2023/957), and one submission portal (THETIS-MRV). They were drafted in the same legislative cycle by the same directorate and contain explicit cross-references. The result is one set of monitoring data feeding two separate financial liabilities. Use the EUA liability calculator and the FuelEU compliance balance calculator in parallel for any fleet forecast.

Quick reference: EU ETS, FuelEU Maritime, and the IMO Net-Zero Framework

The three instruments are often confused or conflated. The table below separates the architectures.

Background: one legislative cycle, two instruments

The EU’s maritime decarbonization package arrived in the Official Journal in mid-2023 as two parallel acts. Both apply from 1 January 2024 in their reporting dimension; both produce a financial liability from the 2025 compliance year forward. The drafters knew they were regulating the same fleet on the same voyages and built the package on a single data spine. That spine is Regulation (EU) 2015/757, amended by Regulation (EU) 2023/957 specifically to serve both the ETS extension and FuelEU verification. The Commission’s own FAQ characterizes the two as “complementary, not duplicative.”

“Double regulation” is technically a misnomer in its strongest form. The two instruments do not duplicate each other because they sit on different policy axes. EU ETS rewards absolute tonne reduction: a ship that burns 10% less fuel cuts its EUA bill by 10% of the EUA price. FuelEU rewards intensity reduction: a ship that switches to a lower-intensity fuel mix improves its compliance balance regardless of whether it burns more or less fuel in aggregate. A methanol dual-fuel retrofit running on e-methanol simultaneously eliminates the ETS bill (near-zero funnel CO2) and produces a large FuelEU positive balance. The investment is rewarded through both channels.

The legitimate concern behind the “double regulation” label is the negative-direction mirror: a ship that does nothing, burning pure fossil VLSFO, pays both an ETS bill and a FuelEU penalty on the same fuel. That is two instruments on one fuel, not one instrument counted twice. The Commission’s position is that the two financial charges serve distinct policy functions and do not constitute double counting in the legal sense.

Formal scope: vessels, voyages, gases

Vessel size. Both instruments apply to ships of 5,000 GT and above undertaking commercial voyages. Below 5,000 GT neither regulation applies in the current period. Article 30 of the amended ETS Directive requires a Commission report by 31 December 2026 with options for extending coverage down to 400 GT; Article 28 of FuelEU requires a similar report by 31 December 2027. Neither extension has been legislated.

Voyage geometry. Both instruments apply on the 100% / 50% rule. Legs between two EEA ports: 100% of emissions and energy. Legs between an EEA port and a non-EEA port: 50% of emissions and energy. Time at berth in an EEA port: 100%. The geometry is identical because the EU MRV regulation, which feeds both, was already structured this way. A practical consequence: a Singapore-to-Rotterdam voyage counts 50% for both instruments. The Rotterdam berth then counts 100%.

Gases covered. EU ETS as extended to maritime covers CO2 from 2024. Methane (CH4) and nitrous oxide (N2O) are added from 2026 under Article 3ge of the amended Directive. GWP100 values from IPCC AR5 apply: CH4 at 28, N2O at 265. FuelEU covers all three gases from 2025 inception, expressed as CO2-equivalent using the same IPCC AR5 GWPs. The Commission’s implementing regulations align the GWP figures across the two instruments so that the same tonne of methane carries the same CO2-equivalent weight in both calculations.

Phase-in asymmetry. The ETS phase-in is on coverage: 40% of verified emissions in 2024, 70% in 2025, 100% from 2026. FuelEU has no phase-in on coverage; it applies 100% from day one. FuelEU’s trajectory is instead on the intensity target: 2% reduction below the 2020 baseline of 91.16 gCO2eq/MJ in 2025, 6% in 2030, 14.5% in 2035, 31% in 2040, 62% in 2045, and 80% in 2050. The phase-in structures do not interact mathematically; one does not cancel or credit against the other.

Operator attribution. Both regulations regulate the company as defined in the ISM Code, which can be the registered owner or the entity that has assumed ISM responsibility. The administering Member State for ETS purposes is set by an attribution algorithm in Article 3gf of the amended Directive. The FuelEU verifier is appointed by the company, subject to accreditation under Regulation (EC) No 765/2008. The Commission’s 2024 implementing-act consultation indicated that single-entity verification covering both instruments is permitted and encouraged.

The cap-and-trade versus intensity distinction

The single most important architectural difference is the regulatory pathway. EU ETS is a quantity-driven cap-and-trade instrument: the EU sets a declining cap on total allowances across all sectors; the market clears at whatever price equates supply and demand; each regulated emitter surrenders allowances equal to its verified absolute emissions. The maritime sector draws from the general industrial cap. Maritime gets no free allowances: every EUA surrendered by a shipping company was bought at auction or on the secondary market.

FuelEU is a price-driven intensity standard: the EU sets a declining gCO2eq/MJ target in the regulation text; each ship calculates its compliance balance as the gap between actual intensity and target, weighted by energy consumed; and a fixed-formula penalty applies to negative balances. The penalty rate is EUR 2,400 per VLSFO-equivalent tonne of energy deficit, with a repeat-offender multiplier (k_mult: 1.0 for first non-compliance year, 1.1 for second consecutive, escalating under Article 23).

A consequence of this distinction is that the marginal abatement cost of any retrofit looks different through each lens. Grey methanol cuts ETS surrender modestly (minor carbon-intensity gain over fossil MGO) but barely moves the FuelEU balance, because grey methanol’s WtW intensity is close to fossil. Green e-methanol from renewable electricity and direct-air-capture CO2 eliminates the ETS bill entirely (near-zero funnel CO2) and produces a large FuelEU positive balance. The RFNBO multiplier of 2x applied to renewable fuels of non-biological origin between 2025 and 2033 amplifies the FuelEU reward for e-fuels. EU ETS does not multiply RFNBOs; it simply zero-rates their tank-to-wake CO2. So an RFNBO investment is rewarded once at the EUA price and once at twice the FuelEU intensity-gap rate. The legislator chose the multiplier specifically to push capex toward RFNBOs in the early years.

EU ETS: the absolute-emissions instrument

The EU ETS bill for a ship is mechanically direct. Take the verified annual maritime CO2-equivalent emissions on the regulated voyage geometry, apply the phase-in factor, and surrender that many EUAs by 30 September. The EU ETS surrender mechanics page covers the Union Registry transactions in full. Key points for double-regulation purposes:

The bill scales linearly with the EUA price. At EUR 80 per EUA, 10,000 tonnes of CO2-equivalent costs EUR 800,000. At EUR 100, the same emissions cost EUR 1,000,000. The operator bears both the EUA cost and the market-timing risk of when to buy. Companies that hedge through forward EUA purchase lock in a different effective price from those who buy at spot.

The penalty for default is EUR 100 per tonne of CO2-equivalent not surrendered, plus the obligation still to surrender the missing allowances. Two consecutive years of default enable the administering Member State to issue an expulsion order: the company’s ships may be refused entry to EEA ports. The administering Member State under Article 3gf handles prosecution; the ship’s flag state is not the regulator here.

Because the ETS bill is absolute, any fuel switch that cuts funnel carbon cuts the bill proportionally. Replacing 100 tonnes of VLSFO (carbon factor 3.114) with 100 tonnes of certified bio-MGO (biogenic-zero under Article 38 MRR) eliminates 311.4 EUAs from the surrender. At EUR 80, that is EUR 24,912 per 100 tonnes of fuel switched. The same switch under FuelEU shifts the compliance balance by the energy-weighted intensity gap, which is a separate arithmetic: the two savings sum and do not overlap.

The allowance allocation page covers the maritime-earmarked share of ETS auction revenues flowing back through the Innovation Fund and the Modernisation Fund. Operators in those funding programs may find that ETS revenues partly defray retrofit capex, which changes the net compliance cost calculus.

FuelEU Maritime: the intensity instrument

FuelEU does not surrender allowances. It computes a gCO2eq/MJ figure for each ship, compares it to the annual target, and charges a penalty on any gap. The intensity formula breakdown article covers the Article 4 and 5 arithmetic in detail. Here the focus is on how the instrument interacts with ETS.

The defining design feature is that FuelEU levies an intensity-gap penalty, not a per-tonne carbon price. A ship that burns 10,000 tonnes of VLSFO and nothing else faces: (a) an ETS bill on the absolute CO2 (around 31,140 EUAs at full phase-in), and (b) a separate FuelEU bill on the intensity gap between VLSFO’s WtW intensity of ~92.6 gCO2eq/MJ and the 2025 target of ~89.34 gCO2eq/MJ. The gap of ~3.26 gCO2eq/MJ multiplied by the energy consumed in MJ, divided by 41,000 MJ per VLSFO-equivalent tonne, multiplied by EUR 2,400, yields the FuelEU bill. The two bills coexist on the same fuel but compute different things from it.

A positive FuelEU balance can be banked for the following year, borrowed in advance against next year’s expected positive balance, or pooled across vessels in the same company or in a contracted pool with other companies under Articles 6 and 19. The compliance balance and pooling article covers the mechanics. Pooling is the tool that allows a fleet with mixed fuel performance to zero out its aggregate FuelEU liability. The ETS has no equivalent pooling mechanism.

The FuelEU penalties, pooling and multipliers article covers the penalty escalation and the k_mult factor. The first-year rate is 1.0; the second consecutive non-compliance year is 1.1; further years escalate. A company that misses the FuelEU target for three consecutive years faces a materially higher effective penalty rate, which is the legislative mechanism that prevents indefinite non-compliance at a fixed cash cost.

The IMO Net-Zero Framework: the global counterpart

The IMO Net-Zero Framework adds a third instrument once it enters into force, at which point a vessel trading into the EU will face all three simultaneously on the EU portion of the voyage. The framework was approved by majority vote at MEPC 83 in April 2025, comprising a GHG Fuel Intensity (GFI) standard and a two-tier global pricing mechanism using Remediation Units (RUs) for non-compliance and Surplus Units (SUs) for over-compliance, plus an IMO Net-Zero Fund as the repository for RU revenue.

Three facts about the current status of the framework require precise statement:

First, the framework was approved at MEPC 83 but has not been formally adopted. An extraordinary MEPC session was convened in October 2025 specifically to adopt the framework under the MARPOL tacit-acceptance procedure. That session adjourned without adopting the text. The decision was deferred to a reconvened session. Until formal adoption occurs, the framework is an approved-but-not-yet-adopted text, and no entry-into-force date is confirmed. The originally planned 1 January 2027 entry into force is no longer on track.

Second, the GFI structure is intensity-based (gCO2eq/MJ WtW), which makes it architecturally similar to FuelEU. The framework uses the IMO LCA Guidelines (MEPC.376(80) and MEPC.391(81)) for default well-to-wake emission factors. Once in force, the framework applies to all ships of 5,000 GT and above on international voyages, globally. The Required GFI trajectory starts at 4% below the 2008 baseline by 2028 in the approved text.

Third, the RU price approved at MEPC 83 starts at USD 100 per tonne CO2-equivalent in the initial compliance period. That price is not market-discovered; it is administratively set by the IMO under the adopted mechanism, with a review process built in. The GFI compliance calculator handles the GFI side once the framework is in force.

For fleet planning as of mid-2026, the IMO instrument should be modelled as a prospective additive layer on the EU compliance stack, with an uncertain start date. The GFI reduction trajectory article documents the planned trajectory in detail.

How the three instruments interact on one voyage

When all three instruments are in force for a vessel on, say, a Rotterdam-to-Singapore voyage (a 50% extra-EEA leg), the compliance arithmetic stacks as follows:

EU ETS: 50% of the voyage’s absolute CO2-equivalent emissions fall under ETS surrender, at whatever the EUA price is. The Rotterdam berth is 100%.

FuelEU Maritime: 50% of the voyage’s energy in MJ enters the FuelEU intensity denominator for the leg; the Rotterdam berth’s energy enters at 100%. The WtW intensity of the fuel mix determines the compliance balance contribution.

IMO Net-Zero Framework (once in force): 100% of the global voyage’s GFI obligation applies under MARPOL, including the 50% of the extra-EU leg that the EU counts at 50%. The question of whether the EU ETS covers the same 50% of that leg as the IMO instrument would cover is the core double-payment concern the review clauses are designed to address.

Article 30 of the amended ETS Directive and Article 28 of FuelEU Maritime both include explicit review obligations tied to the IMO instrument. The Commission must report by 31 December 2026 (ETS) and 31 December 2027 (FuelEU) on the interaction, with options including a partial credit for RU expenditure against EUA surrender and partial scope withdrawal for the extra-EU 50% segment. Two mechanisms are on the table: (a) credit RU expenditure against EU ETS surrender on the same emission tonnes, on a pro-rata basis; or (b) partial scope withdrawal for the extra-EEA 50% segment if the IMO scheme adequately covers it. No decision has been taken. Until such a decision is implemented by legislative proposal, operators should model the three instruments as additive on the regulated geometry.

Joint MRV reporting under Regulation (EU) 2015/757

The single most important structural feature preventing legal double counting is the joint reporting layer under Regulation (EU) 2015/757 (amended by Reg. 2023/957). There is one monitoring plan per ship, one accredited verifier, one annual report due by 31 March, one THETIS-MRV submission, and one verified data set. The two financial liabilities are computed downstream from the same row of data. Operators do not file twice; they do not commission two verifications.

Regulation (EU) 2023/957 amended the MRV regulation to add the data fields needed for ETS surrender (CH4 and N2O from 2026, the per-voyage geometry split for the 50%/100% rule) and to require that the same submission feed both ETS and FuelEU verification. Article 4 of Reg. 2023/957 amended Article 11 of the original MRV to require a consolidated annual statement explicitly serving both instruments. That statement must include a reconciliation block certifying that the same physical fuel is not, for example, claimed as biogenic-zero for ETS and as fossil for FuelEU or vice versa. The verifier signs a single statement under Article 13.

This single-data-layer design is the technical answer to “are you sure they are not double-counting me?” The same physical bunker is reported once, allocated once to voyage geometry, and rated once for WtW intensity. The two regulations read the same record in the same database.

THETIS-MRV: the single submission system

The submission portal is THETIS-MRV, operated by EMSA on behalf of the Commission. It has been live since the 2018 reporting year for the original MRV regulation. The 2024 release added the fields and validations required for the ETS extension and FuelEU. Companies submit their annual report through the portal; the verifier signs off through the portal.

The portal generates four downstream products per ship-year:

• The public emission report under MRV Article 21, published on the EMSA website with a 12-month delay.
• The EUA surrender quantity for the ETS, transmitted to the administering Member State and to the Union Registry.
• The FuelEU compliance balance in gCO2eq, transmitted to the FuelEU verifier and to the company.
• The integrated FuelEU document of compliance, issued by the verifier within four months of submission, valid for the following compliance year.

The 2024 release also exposes the fuel-quality certificate field needed to claim FuelEU credit for biofuels, biogases, RFNBOs, and recycled-carbon fuels. Without a verified Bunker Delivery Note plus chain-of-custody documentation path through THETIS-MRV, a fuel defaults to its fossil counterpart WtW intensity. That rule prevents “ghost biofuel” claims from contaminating the FuelEU balance and the ETS biogenic-zero treatment simultaneously.

Biogenic and RFNBO fuel treatment: where the asymmetry matters

The technical risk of genuine double counting sits in two narrow places, both addressed in the regulations. Understanding them is essential for operators buying bio-LNG or RFNBOs.

Bio-LNG and biofuels meeting RED III sustainability criteria. Under Article 38 of the Commission Implementing Regulation (EU) 2018/2066 (the MRR), biogenic CO2 at the funnel is zero-rated for ETS surrender. The chain-of-custody certificate filed through THETIS-MRV establishes this. Under FuelEU Annex II, the same bio-LNG is rated at its WtW intensity per the sustainability certificate: around 20 to 35 gCO2eq/MJ for advanced waste-stream bio-LNG. The ETS reward is the avoided EUA surrender on funnel CO2; the FuelEU reward is the WtW intensity gain below the target. These are computed from different physical quantities (funnel carbon for ETS, full WtW for FuelEU) and there is no double counting. The certificate determines treatment in both instruments, and it is filed once.

Conventional fossil LNG. Treated as fossil in both instruments. ETS surrender covers the funnel CO2, and methane slip from low-pressure dual-fuel engines under the Sintef-derived default factor in MRR Annex VI from 2026. FuelEU rates it at the WtW intensity of fossil LNG, around 76 to 80 gCO2eq/MJ depending on engine type and methane-slip rate.

RFNBOs (e-fuels: e-methanol, e-ammonia, e-hydrogen). A renewable fuel meeting the RED III RFNBO criteria under Commission Delegated Regulation (EU) 2023/1185 is treated as biogenic-zero for ETS surrender on its tank-to-wake CO2. For FuelEU it is rated at near-zero WtW intensity (around 5 gCO2eq/MJ for renewable-electricity-sourced hydrogen, around 15 for renewable methanol from direct-air-capture CO2), then multiplied by 2x through the RFNBO multiplier between 2025 and 2033. The ETS zero-rates it once; FuelEU rewards it at twice the intensity-gap rate. That double-positive effect is intentional and is the legislative mechanism for pushing early RFNBO adoption.

Recycled carbon fuels (RCFs). Narrower sustainability path under RED III. Treated as fossil for ETS surrender on the funnel CO2 unless the input carbon stream qualifies for biogenic-zero (rare). Rated in FuelEU at declared WtW intensity, which varies widely. Operators should expect RCF treatment to tighten in the 2027 review.

Practical compliance scenarios

Three scenarios show the additive cost structure.

Scenario A: 100% fossil VLSFO. A 30,000 GT bulker burning 5,000 tonnes of VLSFO on intra-EEA routes in 2026 (full phase-in):

• ETS: 5,000 t * 3.114 = 15,570 t CO2, 100% intra-EEA, 100% phase-in = 15,570 EUAs. At EUR 80: EUR 1,245,600.
• FuelEU: WtW ~92.6 gCO2eq/MJ, 2026 target ~89.34 gCO2eq/MJ, gap ~3.26 gCO2eq/MJ. Energy = 5,000 * 41,000 = 205,000,000 MJ. Balance deficit = 3.26 * 205,000,000 = 667,300,000 gCO2eq. Penalty = 667,300,000 / (41,000 * 92.6) = ~175.7 t VLSFO-equiv * EUR 2,400 = EUR 421,680.
• Total: EUR 1,667,280 per year. Split: 75% ETS, 25% FuelEU.

Scenario B: 30% bio-LNG blend (70% fossil LNG, 30% certified bio-LNG, energy-equivalent). Same 5,000 tonnes total energy (converted to LNG equivalent, fossil carbon factor 2.75):

• ETS: 70% * 5,000 t LNG-equiv * 2.75 = 9,625 t CO2 = 9,625 EUAs. At EUR 80: EUR 770,000. Bio-LNG portion contributes zero.
• FuelEU: Blended WtW = 0.7 * 78 + 0.3 * 25 = 54.6 + 7.5 = 62.1 gCO2eq/MJ. This is below the 2026 target of ~89.34, so the balance is positive by (89.34 - 62.1) * 205,000,000 = 5,584,700,000 gCO2eq. FuelEU credit, bankable or poolable.
• Total: EUR 770,000 ETS only. The 30% bio-blend has cut the ETS bill 38% and flipped FuelEU to a credit.

Scenario C: 100% e-methanol (RFNBO). Near-zero funnel CO2 under the mass-balance treatment in Delegated Regulation 2023/1185:

• ETS: Biogenic-zero. Zero EUAs.
• FuelEU: WtW ~15 gCO2eq/MJ. Below 89.34 target by 74.34. Balance = 74.34 * 205,000,000 = 15,239,700,000 gCO2eq positive. With 2x RFNBO multiplier: effective balance 30,479 tonnes CO2eq positive. Large FuelEU credit, highly poolable.
• Total: Zero ETS, large FuelEU credit. Both instruments reward the investment.

These three scenarios show that the negative-direction “double regulation” risk is bounded: it is two distinct bills on the same fossil fuel, not the same tonne counted twice. In the positive direction, decarbonization investments are rewarded through both channels.

Consolidated compliance cost for a typical fleet

For a mid-size operator running 20 vessels averaging 30,000 GT on a mix of intra-EU and extra-EU trades, the consolidated annual compliance cost under fully fossil fuel operations runs in the range of EUR 25 to 45 million per year at full ETS phase-in (from 2026) at an EUA price of EUR 80 to 100. The rough split is 75 to 80% ETS, 20 to 25% FuelEU under fossil. With a 30% bio-LNG blend, the ETS share drops toward 50% and FuelEU can flip to a credit position.

Fleet planners minimize total cost by attacking the two bills along different vectors:

• ETS bill: reduced by cutting absolute carbon through operational measures (slow steaming, hull and propeller maintenance, weather routing) and efficiency retrofits (air lubrication, wind-assist, waste-heat recovery). Every tonne of CO2 avoided saves one EUA.
• FuelEU bill: reduced by reshaping the fuel mix toward lower WtW intensities through bio-blending and eventual RFNBO procurement. Pooling under Articles 6 and 19 of FuelEU Maritime spreads positive balances across the fleet to zero out negative ones. The ETS has no pooling equivalent.

The EU ETS scope calculator handles the voyage geometry and phase-in arithmetic. The FuelEU GHG intensity calculator handles the WtW calculation. Run both in parallel for any fleet-level forecast.

Capex priority order

The interaction of the two instruments shapes the capex priority order for retrofit decisions. In approximate order of EUR per tonne CO2-avoided efficiency as of mid-2026:

1. Operational measures (slow steaming, hull cleaning, propeller polishing, weather routing). Cost near-zero or negative. Cuts both bills proportionally to the absolute fuel saving. Always the first priority.
2. Energy-efficiency retrofits (air lubrication, wind-assist, waste-heat recovery, shore-power readiness). Cost EUR 50 to 200 per tonne CO2 avoided. Cuts both bills.
3. Bio-blend procurement (certified bio-LNG, sustainable biofuel, B30 blend). Cost EUR 200 to 500 per tonne CO2 avoided, depending on certificate premium. Eliminates ETS liability on the biogenic fraction; can flip FuelEU to a credit.
4. Dual-fuel newbuild or major conversion (LNG, methanol, ammonia readiness). Capex EUR 5 to 30 million per vessel. Enables future RFNBO use. Amortized abatement cost EUR 600 to 1,200 per tonne CO2.
5. RFNBO procurement (e-methanol, e-ammonia, green hydrogen). Cost EUR 1,200 to 2,500 per tonne CO2 avoided as of mid-2026, projected to fall toward EUR 600 by 2030. Maximum reward under both instruments plus maximum FuelEU multiplier credit.
6. Onshore power supply (OPS). Capex per vessel EUR 1 to 3 million. Eliminates berth emissions under both instruments. Mandatory under FuelEU from 2030 for container and passenger ships at EEA ports.

EUR 2,400 per VLSFO-equivalent tonne of FuelEU penalty translates to roughly EUR 800 per tonne CO2-equivalent at typical intensities, well above most observed EUA prices. An investment that clears the EUA price as a marginal abatement cost threshold is almost certain to clear the FuelEU threshold as well. That alignment is why the two instruments reinforce each other in the positive direction.

Charter-party allocation: the BIMCO joint clause

When a ship is on time charter, the question of who pays the ETS bill and who pays the FuelEU bill requires explicit contract language. BIMCO published separate clauses for each instrument: ETSCLAUSE 2024 and FUELEU CLAUSE 2024. A joint EU compliance clause covering both in a single structure was under preparation as of mid-2026, expected for publication in 2026 or 2027.

The joint clause is expected to follow a transparent pass-through structure for time charters: the charterer reimburses the owner for the actual EUA cost and for the actual FuelEU penalty (or credits the owner for FuelEU credits generated by the charterer’s fuel-procurement choices). The THETIS-MRV published figures serve as the definitive record binding both parties. The clause also provides a mechanism for the bio-fuel premium: if the charterer specifies bio-LNG bunkering, the charterer pays the certificate premium and receives the EUR-per-tonne saving on both bills. For voyage charters the owner typically bears both bills, with compliance cost already reflected in the freight rate.

Operating two separate clauses creates the risk of inconsistent fuel-classification treatment: the same fuel claimed under the ETS column one way and the FuelEU column another. A single joint clause removes that risk. Operators using both separate clauses for new fixtures from 2026 onward should track the BIMCO publication schedule and plan to migrate.

Review clauses and the 2027/2028 recalibration window

Both instruments carry explicit review obligations. Article 30 of the consolidated EU ETS Directive (as amended by Reg. 2023/959) requires a Commission report by 31 December 2026 on the maritime extension, covering the possible extension of coverage down to 400 GT, treatment of offshore vessels, and interaction with the IMO Net-Zero Framework. Article 28 of FuelEU Maritime requires a report by 31 December 2027 covering the WtW factors, the RFNBO multiplier expiry in 2033, the penalty rate, the pooling arrangements, and the IMO instrument interaction. Both reports may be accompanied by legislative proposals.

The 2027/2028 review is the formal opportunity for the EU to recalibrate against whatever global instrument is then in force. Likely outcomes on the current trajectory: a partial credit for IMO RU expenditure against EU ETS surrender on the extra-EU 50% segment; alignment of FuelEU WtW factors with the IMO GFI default factors where small divergences currently exist on bio-LNG; possible extension of the RFNBO multiplier beyond 2033 if uptake is below trajectory; and a tightening of the 5,000 GT threshold to 400 GT to match the IMO scope.

None of these outcomes are guaranteed. The political balance in the Council and the European Parliament will determine the depth of the recalibration. Operators planning capex with a 10- to 15-year amortization horizon should stress-test their models against both the “no credit” scenario (additive instruments, full EU scope retained) and the “partial credit” scenario (RU expenditure credited at, say, 50% against ETS surrender on the 50% extra-EU leg).

Limitations

EUA price uncertainty. The EU ETS cost model depends entirely on the secondary-market EUA price, which fluctuates with energy prices, political developments, and industrial-sector performance. There is no regulatory floor on the EUA price; if the market clears below EUR 20, the ETS compliance incentive drops sharply. FuelEU’s fixed EUR 2,400 penalty rate does not move with the EUA price, which creates the possibility of FuelEU becoming the binding constraint at low EUA prices.

IMO Net-Zero Framework status. As of June 2026, the framework has been approved at MEPC 83 but not formally adopted. No entry-into-force date is confirmed. Fleet-planning models that include an IMO compliance cost from 2027 or 2028 rest on an uncertain assumption. The framework’s GFI trajectory and RU price in the approved text are the best available planning basis, but they remain subject to the outcome of the reconvened adoption session.

Review clause outcomes. The 2027/2028 review clauses give the Commission discretion to propose significant changes to both instruments. The scope of any credit for IMO RU expenditure is not predetermined. Models built on the “no interaction” assumption could materially overstate the combined compliance cost if a credit mechanism is adopted; models built on a “full credit” assumption could understate it if no credit materializes.

Fuel-certification risk. The biogenic-zero treatment in EU ETS and the WtW intensity credit in FuelEU both depend on chain-of-custody documentation filed through THETIS-MRV. If a biofuel supplier fails a RED III sustainability audit after the annual report is filed, the biogenic-zero treatment can be withdrawn retroactively, converting a nil-surrender position to a full-surrender position under ETS. This documentation-chain risk is external to the mathematical framework.

WtW factor updates. FuelEU Annex II default WtW factors will be updated in the 2027 review. Operators who have structured fuel contracts and compliance strategies around current Annex II defaults face repricing risk if the defaults change materially, particularly for methane-slip correction factors on LNG engines.

RFNBO multiplier expiry. The 2x FuelEU RFNBO multiplier expires in 2033 unless extended by the review. Any capital investment predicated on the multiplier’s continuation past 2033 carries regulatory risk.

See also

• EU ETS for shipping
• EU ETS maritime scope and phase-in
• EU ETS surrender mechanics shipping
• EU ETS allowance allocation shipping
• FuelEU Maritime explained
• FuelEU compliance balance and pooling
• FuelEU intensity formula breakdown
• FuelEU penalties, pooling and multipliers
• FuelEU RFNBO multiplier
• IMO Net-Zero Framework
• GFI reduction trajectory 2027 to 2050
• Marine GFI methodology
• IMO DCS vs EU MRV
• EU MRV Regulation

Related calculators

• EUA liability calculator
• EU ETS scope calculator
• FuelEU compliance balance calculator
• FuelEU GHG intensity calculator
• FuelEU penalty calculator
• FuelEU pooling calculator
• GFI compliance calculator
• EU ETS annual allowance cost
• FuelEU Maritime GHG penalty cost