As of January 2025, the maritime transport sector is significantly impacted by the FuelEU Maritime Regulation (Regulation (EU) 2023/1805) (“Regulation” or “FEUM”), adopted on September 13, 2023. This Regulation imposes stringent restrictions on greenhouse gas (GHG) emissions from large ships within its scope and constitutes a fundamental cornerstone of the European Union’s strategy to transition towards sustainable transportation and achieve full decarbonisation of the transport sector by 2050.
The year 2025 will be pivotal for shipping companies, as they will be required to integrate these new regulatory requirements into their business operations. This will not only have economic repercussions but will also necessitate revisions to contractual relationships. Maritime operators must ensure that existing contracts reflect the Regulation’s new obligations and incorporate the mechanisms established by the EU to facilitate compliance.
Before addressing the contractual implications, it is useful to provide a brief overview of the Regulation’s key provisions.
The Legal Framework
The Regulation has been enacted as part of the EU’s objective to achieve a 55% reduction in GHG emissions by 2030 and to accelerate the maritime sector’s transition to renewable and low-carbon fuels. It forms part of the EU’s “Green Shipping” package, alongside the EU Emissions Trading Scheme (EU ETS) and the EU Monitoring, Reporting, and Verification (EU MRV) Regulation, collectively constituting a legislative framework aimed at decarbonising maritime transport.
The FEUM establishes a harmonised regulatory framework to promote the use of renewable and low-carbon fuels in maritime transport across the EU. Specifically, it introduces standardised rules limiting the GHG intensity of energy used onboard ships arriving at, staying within, or departing from ports under the jurisdiction of EU Member States, and mandating the use of onshore power supply (OPS) or zero-emission technology while ships are at berth in EU ports. The Regulation applies to all ships exceeding 5,000 gross tonnage engaged in commercial passenger or cargo transport. It governs 100% of energy usage for intra-EU voyages where both the departure and arrival ports are within the EU Member States, while for voyages involving a third country or an outermost EU region, 50% of energy usage is covered.
The Regulation imposes several obligations on ships, including continuous monitoring and recording of energy use, both at sea and while at berth, annual reporting and verification of GHG intensity levels of the energy used, and compliance with GHG intensity reduction targets established under Article 4(2). The reduction targets commence with a 2% decrease in 2025, progressively increasing every five years until 2050. Non-compliance will result in financial penalties, calculated per metric ton of non-compliant fuel used, with fines starting at €2,400 per ton.
Mechanisms to facilitate compliance
To facilitate compliance, the Regulation introduces specific mechanisms designed to provide flexibility in meeting emissions reduction targets. These mechanisms allow operators to offset emissions across different vessels, effectively “balancing” surpluses and deficits within a given fleet, as well as the possibility to store surpluses to ensure compliance in future years or to borrow from future reporting periods. In other words, if a ship has a compliance deficit for a specific reporting period, it may borrow an advance compliance surplus of the corresponding amount from the subsequent reporting period.
Contractual implications
Among these mechanisms, pooling, which enables compliance balances to be consolidated across multiple ships, in particular, raises a number of contractual issues that parties to shipping agreements and ship financing arrangements must carefully address.
For example, under the Regulation, the shipowner or Document of Compliance (DoC) holder is responsible for ensuring compliance. However, compliance is directly impacted by operational decisions, such as fuel selection, which may not be under the owner’s direct control. Owners should, therefore, consider imposing contractual obligations on charterers regarding fuel selection and type.
Another key issue is the allocation of compliance surpluses. The Regulation does not specify how surplus compliance credits should be distributed. Charterers who invest in alternative fuels may seek contractual assurances that they will benefit from any resulting compliance surplus rather than allowing shipowners to retain the benefits exclusively.
Agreements must also clarify whether, and under what conditions, pooling can occur. Charterers or financial stakeholders may seek veto rights over pooling decisions, particularly if compliance or sanctions risks are involved. Additionally, contracts should set out clear obligations regarding the disclosure of pooling-related information and establish timelines for counterparty review or objections.
These contractual considerations related to the pooling mechanism represent just one aspect of the broader legal challenges that will arise in implementing the Regulation. More generally, the integration of these compliance mechanisms into existing contractual frameworks will require careful legal drafting and negotiation. Operators that fail to properly address these issues could risk significant contractual exposure. For example, charterers investing in alternative fuels should include contractual provisions ensuring they benefit from their investments, while shipowners must ensure they retain adequate control over operational decisions affecting compliance, such as participation in a pooling arrangement.
Future scenarios
Beyond the Regulation itself, the European Commission (EC) has announced an Industrial Maritime Strategy as part of the Clean Industrial Deal. This initiative aims to enhance the competitiveness, sustainability, and resilience of the EU’s maritime manufacturing sector, with further details expected in the coming months. From an industry perspective, this strategy represents a significant opportunity, as the EU is committed to substantial investments in strengthening its global maritime competitiveness.
In addition, the EC plans to introduce an EU Port Strategy, which will address key issues such as security, competitiveness, and sustainability. This strategy is expected to build upon the European Ports Alliance, an initiative launched in 2024 to combat drug trafficking and organised crime in European ports.
Conclusion
The FuelEU Maritime Regulation marks a major regulatory shift for the maritime industry, requiring thorough compliance planning and contractual adjustments. As the legislation is now in effect, shipping companies, charterers, and vessel managers—if they haven’t done so already—must take proactive steps to ensure their agreements align with the new regulatory framework, mitigate risks, and optimise compliance strategies. Given the complexity of these requirements, legal and commercial teams should assess existing contracts and incorporate the necessary amendments well in advance to avoid potential disputes and financial penalties.
Author: Valerio Giovannini is a qualified EU regulatory attorney with extensive experience in European law. He currently practices at the Brussels office of Squire Patton Boggs. Specialising in regulatory compliance, he provides expert legal counsel to clients, focusing on environmental law, sustainability, ESG obligations, and transport and product compliance matters.
Prior to joining Squire Patton Boggs, Valerio led the EU Regulatory Law department at TIER Mobility (and NextBike), a leading German technology company in the sustainable transport sector. In this role, he concentrated on transport technical legislation, public procurement issues, and competition law, particularly related to public tenders. Valerio has authored several articles on EU law and transport-related topics, demonstrating his deep expertise and insight in these areas.
