The FuelEU Maritime regulation, Regulation (EU) 2023/1805, caps the greenhouse gas intensity of energy used by commercial ships above 5,000 gross tonnage that call at European ports, with mandatory reductions starting at 2% below a 2020 baseline in 2025 and tightening to 80% by 2050.1European Commission. Decarbonising Maritime Transport – FuelEU Maritime It also requires container ships and passenger vessels to connect to shore power when berthed at covered EU ports from 2030. The rules apply regardless of flag: a non-EU operator faces the same obligations as a European one the moment its vessel enters European waters.
Which Ships and Voyages the Rules Cover
FuelEU applies to all commercial ships above 5,000 gross tonnage carrying passengers or cargo, which captures most of the global commercial fleet, including container ships, bulk carriers, tankers, and cruise vessels.2EUR-Lex. Regulation (EU) 2023/1805 Smaller ships, fishing vessels, and government craft fall outside the scope.
Geographic reach follows a tiered rule. Energy used on a voyage between two EU ports counts at 100%, and so does energy used while berthed at an EU port. On voyages where one end is outside the EU, only 50% of the energy used counts toward the compliance calculation. Voyages to or from EU outermost regions also count at 50%.
A handful of narrow exemptions exist for passenger ships (excluding cruise vessels) serving small islands, voyages to EU outermost regions, and public service contracts operated by island Member States. All of these exemptions expire on December 31, 2029, so operators relying on them need to plan for full compliance before that date.
The GHG Intensity Reduction Schedule
The regulation sets a declining ceiling on the greenhouse gas intensity of a ship’s annual energy use, measured in grams of CO2 equivalent per megajoule. The 2020 reference baseline is 91.16 gCO2e/MJ, and the required reductions step down as follows:
- 2025: 2% below the 2020 baseline
- 2030: 6% reduction
- 2035: 14.5% reduction
- 2040: 31% reduction
- 2045: 62% reduction
- 2050: 80% reduction
The early targets are modest. A ship burning conventional very low sulfur fuel oil can still comply in 2025, and likely in 2030, with relatively small adjustments to its fuel mix. The pressure begins around 2035, when operators will need meaningful volumes of biofuels, synthetic fuels, or other low-carbon alternatives to stay under the ceiling. By 2050, fossil fuel use without carbon-neutral offsets becomes essentially impossible.
Calculations use a well-to-wake methodology, tracking emissions from fuel production through combustion on the ship. A fuel with low tank-to-wake emissions but a dirty production process, such as hydrogen made from unabated natural gas, still carries a high intensity score. The methodology accounts for methane and nitrous oxide alongside CO2, which matters for ships running on liquefied natural gas: uncombusted methane escaping through the exhaust is scored against the vessel, so LNG is not the compliance shortcut some operators initially expected.3European Commission. Questions and Answers on Regulation (EU) 2023/1805
Shore Power at Berth
Starting January 1, 2030, container ships and passenger vessels must connect to onshore power supply, or use equivalent zero-emission technology, while berthed at EU ports covered by the Alternative Fuels Infrastructure Regulation. The mandate expands to all EU ports equipped with shore power facilities from January 1, 2035.4European Commission. New EU Rules Aiming to Decarbonise the Maritime Sector Take Effect
Ships staying at berth for less than two hours are exempt, since the time needed to hook up and disconnect cables makes brief stops impractical. Ships using their own zero-emission technology, such as onboard batteries, are also exempt, provided that technology produces no CO2, methane, nitrogen oxides, sulfur oxides, or particulate matter during use. Simply reducing auxiliary engine load does not qualify; the alternative has to produce genuinely zero emissions at the point of use.
Who Is Responsible for Compliance
FuelEU assigns compliance responsibility to whichever entity manages the ship under the International Safety Management (ISM) Code. In many cases that is the registered shipowner, but where an owner has delegated operational management to a third-party ship manager, the ship manager becomes the responsible entity. Monitoring, reporting, verification, and penalty liability all follow the ISM company rather than the commercial operator or charterer.
Monitoring, Reporting, and the Document of Compliance
Compliance starts with a monitoring plan that must be in place before the reporting period begins. The plan identifies the ship by its IMO number, lists the fuel types it uses, and describes how consumption data will be collected, whether through bunker delivery notes, flow meters, or tank soundings. It also identifies backup procedures for filling data gaps if a primary measurement system fails.
After each calendar year, the responsible entity submits a FuelEU report to the THETIS-MRV database and to an accredited verifier by January 31 of the following year. The verifier checks the data for consistency with the monitoring plan, compares it against external records such as port logs and bunker receipts, and confirms whether the ship met its intensity target. If everything checks out, the verifier issues a FuelEU Document of Compliance by June 30.2EUR-Lex. Regulation (EU) 2023/1805 That document must be kept on board and is subject to inspection during port state control.
Flexibility Mechanisms: Pooling, Banking, and Borrowing
Three mechanisms give operators room to manage compliance across ships and across years.
Pooling lets two or more ships combine their compliance balances, so a vessel with a surplus offsets one with a deficit. Pooling works across companies as well as within a fleet, opening the door to commercial pooling arrangements. Each ship can belong to only one pool per reporting period, a single accredited verifier must oversee the pool, and pool composition must be finalized by April 30 of the verification year.
Banking lets a ship that ends a reporting period with a compliance surplus carry that surplus into the following year. It must be recorded in the FuelEU database before the Document of Compliance is issued.
Borrowing lets a ship pull forward compliance from the next year, but with strict limits. The deficit covered cannot exceed 2% of the GHG intensity limit multiplied by the ship’s total energy consumption. The borrowed amount must be repaid at 1.1 times its value in the next period, a 10% cost on top. A ship cannot borrow in two consecutive periods, and a ship that borrows cannot participate in pooling during the same verification cycle.
Rewards for Cleaner Fuels and Wind Propulsion
Renewable Fuels of Non-Biological Origin, which include green hydrogen, e-methanol, and e-ammonia produced with renewable electricity, receive a 2x multiplier in the compliance calculation until 2034. That means a small volume of qualifying RFNBO can close a significant compliance gap in the early years. From 2034 onward, a separate RFNBO sub-target requires a minimum share of these fuels in the energy mix.
Ships fitted with wind-assisted propulsion, such as rotor sails, rigid sails, suction wings, or kites, receive a reward factor that lowers their reported GHG intensity by up to 5%, depending on the ratio of effective wind power to installed propulsion power.
Penalties for Missing the Targets
The penalty for exceeding the GHG intensity limit is €2,400 per tonne of VLSFO-equivalent non-compliant energy. The calculation converts a ship’s compliance deficit into an energy quantity by dividing it by the vessel’s actual GHG intensity, then multiplies by 41,000 MJ per tonne and the €2,400 rate. For a large container ship burning predominantly fossil fuel in a high-reduction year, the penalty can easily reach six or seven figures. If a ship carries a compliance deficit in two or more consecutive reporting periods, the penalty is increased through a multiplier under Article 23(2).
Failing to connect to shore power when required triggers a separate charge: €1.50 multiplied by the ship’s total electrical power demand at berth, multiplied by the total hours of non-compliance.
Unpaid penalties block issuance of a valid FuelEU Document of Compliance. Without that document, a vessel faces operational restrictions at EU ports, including possible denial of entry or detention until the financial obligation is settled. Collected penalty revenue is earmarked for projects supporting maritime decarbonization and renewable fuel infrastructure.
How FuelEU Maritime Fits With the EU ETS
FuelEU does not operate in isolation. The EU Emissions Trading System was extended to maritime shipping in January 2024, requiring companies to purchase and surrender emission allowances for CO2 released by ships above 5,000 gross tonnage calling at EU ports.5European Commission. Reducing Emissions From the Shipping Sector The phase-in requires allowances for 40% of reported emissions in 2025, 70% in 2026, and 100% from 2027 onward.
The two regulations target different things. FuelEU governs fuel GHG intensity on a well-to-wake basis, pushing operators toward cleaner fuel choices. The EU ETS puts a direct price on CO2 through the allowance market. Both apply to the same ships on the same voyages, and both use the 50% rule for voyages with one leg outside the EU. Fuel-switching decisions have to be weighed against both at once, and the cheapest FuelEU path does not always align with the cheapest ETS path, particularly for fuels like LNG that have moderate CO2 but significant upstream and methane-slip emissions.
Who Pays Under a Charter Party
The ISM company bears regulatory responsibility, but a time charterer typically controls the fuel purchasing decisions. That mismatch has generated commercial tension over who pays for FuelEU compliance. BIMCO published a FuelEU Maritime Clause for Time Charter Parties in 2024 to address it.6BIMCO. FuelEU Maritime Clause for Time Charter Parties 2024
Under the standard BIMCO clause, the charterer bears the financial burden of compliance. If the vessel ends a reporting period with a negative compliance balance, the owner calculates a surcharge equal to the expected FuelEU penalty and invoices the charterer. The charterer has the right to instruct the owner to bank, pool, or borrow compliance balances, but takes on full liability for any costs those instructions generate. If the charterer fails to pay, the owner can suspend performance under the charter after five days’ notice. The owner’s role is limited to maintaining the monitoring plan and ensuring the vessel’s data is properly reported and verified.
Not every charter party uses the BIMCO standard, and the allocation of FuelEU costs can be negotiated differently. The BIMCO clause reflects the emerging market expectation that the party controlling fuel choices should carry the compliance risk. Charterers who leave FuelEU out of their fixture negotiations risk inheriting penalty exposure they never priced into the deal.