· 5 min read
In the first part of this series on emissions trading in the maritime sector, we outlined the principles of the obligations. In this second part, we explain market developments in the EU ETS and the complementary FuelEU Maritime Regulation on reducing greenhouse gases in fuels.
Market and price developments for emission allowances
The European Energy Exchange (EEX) based in Leipzig and the ICE based in London act as central marketplaces for the procurement and trading of emission allowances in the EU ETS (EUAs). The EEX handles both primary and secondary market transactions, while the ICE serves the secondary market. In the primary market, all new EUAs are issued through standardised auctions, while in the secondary market there are spot and futures contracts for EU ETS obligations, intermediaries, traders and financial investors. The average EUA price in 2024 was around EUR 67/tCO21. Analysts forecast an increase to up to EUR 200/t in the coming years (Figure 1). Price dynamics are determined by five structural drivers:
• Stricter cap reduction: The linear reduction factor of 4.3% (2024–2027) and 4.4% (from 2028) will lead to a constant annual reduction of around 88 million EUAs from 2024 onwards
• The gradual inclusion of shipping will bring up to 78.4 million additional EUAs into the system
• Market Stability Reserve (MSR): If a threshold for surplus EUAs is exceeded, the MSR will withdraw and delete part of the surplus
• REPowerEU auctions: The programme will weigh on price developments in the short term due to additional auction volumes of around 267 million EUAs between 2023 and 2026, but will lead to a correspondingly sharper supply reductions from 2027 onwards
• Geopolitical factors: The war in Ukraine and energy price volatility are influencing EUA prices via temporarily very high correlations between gas and EUA prices, while the adoption of the ‘Fit for 55’ package has strengthened market confidence in long-term price increases
Figure 1: Historical price development and price scenarios for EUAs until 2030 (source: carboneer, data source: EEX)
Impact of emissions pricing and possible hedging
In 2024, the financial impact of the EU ETS on shipping was still limited, despite administrative burdens. As only 40% of emissions were covered by the EU ETS, the average price per tonne of CO2 actually emitted by ships was just over EUR 25. For a ship fuelled with bunker oil, the costs for intra-Community voyages (100% coverage) increased by around 15% for entries into or exits from the EU/EEA area (50% coverage) by 7.5% (assumptions for bunker oil, price: EUR 500/t and emission intensity: 3.1 tCO2/t) Thus, the additional EU ETS costs probably did not have a major impact on the route choices made by shipping companies. Detours via Africa to avoid the Suez Canal or increased tensions in the Strait of Hormuz leading to higher insurance costs probably posed a greater economic challenge for many companies.
In 2025, the emissions covered by the EU ETS will rise to 70%. With bunker oil prices remaining constant and an assumed EUA price of EUR 70/t, CO₂ costs will double. Similarly, the coverage of all emissions from 2026 onwards will be accompanied by a further significant increase in the financial burden. Systematically hedging these price risks by purchasing emission allowances via spot or futures market contracts can both reduce price risk and secure future EUA requirements for shipping companies. The optimal strategy depends on the individual risk profile, emission volatility and available financing resources. In view of the forecast price increases for EUAs, tailor-made procurement and hedging approaches are becoming increasingly important for affected shipping companies.
With the expansion of the EU ETS to maritime shipping, charter agreements along the entire charter party chain must be redesigned. The decisive factor is who assumes operational responsibility for cargo, route or speed (often the charterer), as only this party can be held liable by the shipping company for the costs of emission allowances. Charter contracts should therefore clearly stipulate who is liable for emission costs during the various phases of the voyage and how any deviations are to be settled.
FuelEU Maritime: Complementary rules for fuels
On 1 January 2025, the FuelEU Maritime Regulation (EU) 2023/1805 came into force3 and supplements the EU ETS for ships over 5,000 gross tonnage. While the EU ETS prices absolute CO₂ quantities via a cap-and-trade system, FuelEU Maritime aims to gradually reduce the greenhouse gas intensity of on-board energy, in particular fuels. The binding reduction targets are 2% by 2025, 6% by 2030, 14.5% by 2035 and 80% by 2050. FuelEU Maritime uses a well-to-wake approach that evaluates emissions from raw material extraction to combustion on board. Alternative fuels such as biofuels or e-fuels are accounted for in a comparable manner using standardised emission factors. If a ship falls short of its annual intensity target, penalties of 2,400 EUR per tonne of VLSFO equivalent deficit will be imposed. Bunker oil or Very Low Sulphur Fuel Oil (VLSFO) serves as the basis for calculation due to its market dominance. From 1 January 2030, container and passenger ships in TEN-T (Trans-European Transport Network) ports must use shore power during layovers, with violations costing 1.50 EUR per unused kWh.
Both systems complement each other: the EU ETS limits and prices emissions, while FuelEU creates incentives for lower-emission fuels. In a further article, we will take a detailed look at the fundamentals and implications of FuelEU Maritime.
Conclusion and recommendations for action
Inclusion in the EU ETS presents shipping companies with complex challenges in the areas of emissions measurement, procurement of emission allowances and cost pass-through. The gradual introduction and supplementation with FuelEU Maritime is intended to effectively reduce emissions in maritime transport.
Risks due to administrative burdens, penalties or volatile prices in the EU ETS can be minimised through proactive and strategic planning and actions. A possible guide for action for shipping companies subject to the scheme is shown in Figure 2.
Figure 2: Action guide for shipping companies in the EU ETS and FuelEU Maritime (source: carboneer)
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Sources:
1. DEHSt, 2025, VET-Bericht 2024, URL: https://www.dehst.de/SharedDocs/downloads/DE/publikationen/VET-Bericht-2024.pdf?__blob=publicationFile&v=7
2. EEX, 2025, EU ETS Auctions, URL: https://www.eex.com/en/market-data/market-data-hub/environmentals/eu-ets-auctions
3. EU, 2023, FuelEU Maritime Regulation, URL: https://eur-lex.europa.eu/eli/reg/2023/1805/oj/eng
