News / FuelEU sails in, charging a heavy price for vessel emissions – but who pays? 

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The beginning of 2025 marked the entry of FuelEU, the robust European legislation imposing major costs on shipowners for their vessel emissions.

Carriers have already announced their intention to pass these FuelEU costs on to their customers, Hapag-Lloyd having warned prices would “roughly double“.

Shipowners will pay around three times the cost of very-low-sulphur fuel oil (VLSFO) energy equivalent, or €2,400 per tonne, for non-compliance with FuelEU, an amount set to increase in the coming years.

Sequential years of non-compliance will cause a shipowner’s premium to increase cumulatively, even more than the successive annual increases, which means that, while it is open to shipowners not to comply with the legislation, FuelEU costs will grow to become a major drain on their operations.

While the EU ETS currently imposes substantially greater costs for a typical vessel, of around three times, this will flip over the next decade, says OceanScore MD Albrecht Grell, to the point where the cost of FuelEU becomes many times greater than that of ETS.

“Currently it is only a third, but by 2030 it will catch up, and by 2050 the cost of FuelEU will be massively beyond ETS,” he told The Loadstar.

A ‘pooling’ mechanism allows high-emitting vessels to be grouped with a low- or zero-emitting one. Classification society Lloyd’s Register (LR) suggested recently that pooling ten 19,000 teu containerships with just one that is methanol-fuelled would save a shipowner €277m over four years. This “far outweighs the likely cost of building the methanol-fuelled containership”, LR noted.

Mr Grell pointed out that, unlike with other legislation, there are opportunities for shipping stakeholders to benefit financially from FuelEU.

“My concern is not so much the significance of the cost, but who is going to bear it,” he said. “If this is well-managed between the owner, operator and charterer, there is actually an opportunity [to make money] with FuelEU.

“But this will only work if you collaborate. If you’re taking a pretty straightforward, ‘I don’t give a damn’ approach, then the opportunities will be gone to someone else.”

Mr Grell recommended two options for meeting FuelEU. He said: “It is not yet decided whether biofuels… or compliance through pooling deficits will be the cheaper option. There are very low pool prices offered, which means I could run on conventional fuels and just buy, through pooling mechanisms, a surplus from someone who has gone biofuel – that’s strategy one.

“Or, I could go for biofuel myself. And currently I don’t see a clear advantage of one strategy over the other. So our hunch is to not go all-in now, but take a closer look at the market and see how it develops. If you have a clear greening strategy, then it’s obvious that going biofuel is better than pooling, but from a pure commercial perspective, both strategies could be roughly equal.”

The shipping lines will also try to bring their FuelEU costs down through retrofitting vessels. Shipowners have traditionally shied away from this approach, citing long payback periods that may end not long before the end of the vessel’s lifespan.

But, in combination with constraints on shipyard capacity, which is locking owners into waiting times exceeding 2029 for new vessel deliveries, and the development of new equipment like rotor and suction sails, FuelEU could incentivise a retrofit renaissance. That far-away payback horizon for modifications of vessels in service could drastically contract, given the high cost of non-compliance with FuelEU.

Last year, Maersk retrofitted the Maersk Halifax with methanol tanks, increasing the ship’s length by 15 metres, creating a pool-able vessel which could be grouped with others in the fleet for considerable savings.