FuelEU VS. ETS: Key Differences In Maritime Emissions Regulation

The recent Seatrade Maritime News article on FuelEU Maritime regulation provides a detailed comparison with the existing EU Emissions Trading System (ETS). While both frameworks aim to regulate and reduce greenhouse gas (GHG) emissions, FuelEU introduces distinct measures. Here are the key differences:

Emission Measurement Approaches

• • ETS operates on a “tank-to-wake” basis, tracking emissions from the combustion of fuels.
  • FuelEU considers a “well-to-wake” approach, encompassing emissions from fuel production through to combustion. This broader scope makes some fuels, like LNG, appear more favourable under FuelEU due to their lower carbon intensity during production.

Liability for Emission Penalties

• • Under ETS, the responsibility for penalties falls to the ship owner, manager, or bareboat charterer.
  • FuelEU places liability on the Document of Compliance (DOC) holder under the ISM Code, who may not always control fuel choices. This arrangement could create legal complexities since DOC holders might not have agreements with charterers to recover penalty costs.

Financial Implications and Revenue Potential

• • In ETS, owners incur penalties based on emission profiles, phased over three years.
  • FuelEU, beginning in April 2026, includes threshold-based emissions tracking. Vessels generating emissions below threshold limits can create “surpluses,” while those above create “deficits,” with penalties at EUR 2,400 per tonne of VLSFO equivalent. Surpluses could be banked, borrowed, or pooled, potentially creating new revenue channels.

Future Fuel Impact

• • Sustainable biofuels and Renewable Fuels of Non-Biological Origin (RFNBOs) are likely to gain traction as emission limits tighten, favouring these low-carbon fuels under FuelEU’s stringent criteria.

These changes underscore FuelEU’s broader regulatory scope and its implications for ship operators, who may face new challenges in aligning fuel usage with compliance requirements.