As 2024 ends, the maritime shipping industry faces a pivotal turning point. The European Union has set ambitious goals to achieve climate neutrality by 2050 and reduce greenhouse gas emissions from all sectors, including the maritime shipping industry. To drive this transition, the EU introduced two major European Union (EU) regulations—FuelEU Maritime and the EU Emissions Trading System (EU ETS)—poised to reshape operations in 2025, compelling stakeholders to rethink their approach to fuel consumption, emissions, and sustainability. These regulations signal a new era, where compliance and innovation will go hand-in-hand to drive the industry forward.
FuelEU Maritime aims to increase the use of renewable and low-carbon fuels in maritime transport, setting limits on the greenhouse gas intensity of energy used by ships calling at European ports. The regulation will come into effect on January 1, 2025, with increasingly stringent requirements over time.
The EU ETS, on the other hand, is a cap-and-trade system that sets a limit on overall emissions from certain sectors, including maritime shipping. Started in 2024, shipping companies need to purchase and surrender allowances for their emissions. This creates a financial incentive to reduce emissions and invest in more sustainable practices.
Understanding FuelEU Maritime
The FuelEU Maritime initiative aims to drive decarbonisation in the maritime sector by setting requirements on the greenhouse gas (GHG) intensity of energy used by ships trading in the EU or European Economic Area. It establishes progressively stricter limits on the annual average GHG intensity of the energy used on-board, including both voyages and port calls.
Under FuelEU Maritime, ships above 5,000 gross tonnage will be required to calculate and report their annual operational energy efficiency. Starting in 2025, ships will need to comply with a maximum annual GHG intensity limit, which will become increasingly stringent over time, reaching -75% by 2050 compared to 2020 levels.
The regulation applies to 100% of the energy used on voyages within the EU/EEA from 2025, and 50% of the energy used on voyages departing or arriving at an EU/EEA port from 2030 onwards. By 2035, it will cover 100% of energy used on all voyages to and from EU/EEA ports.
Unpacking the EU Emissions Trading System
The EU Emissions Trading System (EU ETS) is a cornerstone of the European Union's policy to combat climate change and reduce greenhouse gas emissions cost-effectively. As a 'cap-and-trade' system, it sets a cap on the total amount of certain greenhouse gases that can be emitted by sectors covered under the system. Companies receive or buy emission allowances, which they can trade with one another as needed. Over time, the cap is reduced, forcing companies to lower their emissions.
Started since January 2024, the EU ETS has extended to cover CO2 emissions from all large ships (of 5,000 gross tonnage and above) performing voyages between European Economic Area (EEA) ports, as well as 50% of emissions from voyages starting or ending outside the EEA and calling at an EEA port. Ship operators have to monitor and report verified annual emissions data, as well as surrender sufficient emission allowances to cover their ships' emissions.
