Event

You're invited to our Tools for managing FuelEU Maritime: the Compliance Manager January 23, 2025

See you there! More events >
X
One Year of EU ETS – What Have We Learned, What Lies Ahead? - OceanScore
< Back to Insights
2024
EU ETS
Retrospective

One Year of EU ETS – What Have We Learned, What Lies Ahead?

December 3, 2024

One Year of EU ETS – What Have We Learned, What Lies Ahead?

2024 will undoubtedly be remembered as the year shipping entered the EU Emissions Trading Scheme (EU ETS). This bold move added yet another layer of complexity to an already highly regulated and intricate industry. Although the first year of EU ETS is not yet complete, many are already keeping March 2025 in the back of their minds, when verified MRV reports will dictate the EU Allowances (EUAs) to be surrendered. This deadline, coupled with the September 2025 EUA surrender date, leaves nine more months of uncertainty for the industry. Yet, with year-end approaching, it’s an ideal time to reflect on the lessons from this first year and prepare for the road ahead.

 

Lessons Learned

 

Data Challenges:

 

System Readiness and Automation Gaps
Shipping companies and verifiers faced initial struggles with system readiness for EU ETS. Even now, a lack of harmonized data formats, automation and standardized APIs results in inefficiencies. Odd errors in reporting systems and inconsistent data formats underscore the need for standardized practices across the board. 

 

Double Charging for Data Services

A contentious issue has been the attempt by some service providers to charge shipping companies twice for their data—once for the service itself and again for sharing it via APIs. The industry has largely resisted this practice, curtailing most cases of double charging, but continued vigilance will be essential.

 

Discrepancies Between Commercial and MRV Voyages

Significant discrepancies between commercial voyage definitions and MRV reporting requirements have created challenges, particularly for voyage charter agreements. These differences complicate commercial settlements, as event reporting systems often fail to align data accurately in verification statements. This unresolved issue continues to hinder efficient compliance.

 

Technical Off-Hire Reporting

Technical off-hires need to be deducted when invoicing charterers for EUAs – EUAs caused by emissions during off-hires remain the responsibility of the owner. Off-hires though are typically not verified, delaying negotiations and settlements. Improved reporting frameworks could help resolve these inefficiencies and support more seamless compliance.

 

Commercial Challenges

 

Transparency in Transactions

Transparency has emerged as a significant concern in managing EUAs. Invoicing for EUAs has become a labor-intensive task, with diverse format requirements, varying request frequencies, and interim statements complicating the process. Many shipping companies struggle to track whether invoices have been accepted, EUAs delivered, or payments made without a centralized system. Excel, while useful in simpler scenarios, has proven inadequate for the complexities of emissions compliance, prompting companies to seek professional solutions like OceanScore’s ETS Manager.

 

 

“As a high-quality third-party manager, transparency is at the core of how we work with our customers—no hidden charges, no hidden fees. Managing ETS exposure across multiple owners and charterers is a complex task, but OceanScore’s ETS Manager has made it efficient and straightforward. Their solution not only streamlines our processes but also helps us provide clear, transparent cost breakdowns around ETS compliance to our customers, reinforcing our commitment to trust and accountability.” – Rene Menzel, Hammonia Reederei

 

 

 

Shipman Clause Disputes

Shipman clauses continue to be a source of friction, particularly for non-European owners reluctant to accept responsibility for EU ETS compliance. Third-party managers thus often attempt to shift this responsibility onto owners, including the management of commercial processes, which has proven challenging. Managers, as the natural entities to handle compliance (given their MRV and FuelEU obligations), require appropriate compensation for the added workload and protection against counterparty risks to effectively manage EU ETS compliance.

 

Challenges with MOHAs (Monitoring Operators Holding Accounts)

Opening Monitoring Operators Holding Accounts (MOHAs) remains a significant challenge for many companies. Those without MOHAs or Union Registry Trading Accounts face inefficiencies, such as being unable to receive EUAs from charterers or purchase EUAs when needed. Vessel-specific MOHAs often create additional inefficiencies. Concerns about “contaminating” an entire fleet due to non-compliance in one vessel have proven exaggerated, and the headache of managing these multiple accounts appears to outweigh the benefits.

 

EUA Price Risks

Limited access to MOHAs and Trading Accounts could have exposed companies to significant price risks in 2024. However, the relatively low volatility of EUA prices mitigated these risks, providing some stability for companies navigating the first year of compliance.

The lessons from these challenges highlight the need for systematic, scalable solutions to manage emissions compliance effectively, ensuring long-term success under the EU ETS framework.

Looking Ahead: 2025 and Beyond

 

As we approach the surrender deadline for EUAs in September 2025, the following insights stand out:

Unresolved Issues Persist: Many challenges remain, and their true impact will only become clear when EUAs must be surrendered. Temporary solutions may suffice for now, but they are not sustainable long-term.

 

FuelEU Will Amplify Pressure: The introduction of FuelEU regulations will bring similar challenges, further emphasizing the need for systematic solutions.

 

The End of Excel for Compliance Management: Excel’s limitations are becoming increasingly apparent as companies tackle complex regulatory requirements. The continued growth in demand for OceanScore’s ETS Manager – which as of January 2025 will include and blend in FuelEU management in one platform, rebranded as the “compliance manager” – underscores the industry’s shift toward professional, scalable compliance management tools.

With over 50 customers and 1,300 vessels already using OceanScore to navigate EU ETS compliance, the growing need for robust tools is clear. Transparency, efficiency, and collaboration across stakeholders will be crucial to tackling the challenges ahead.

< Back to Insights

Oceanscore in the news

View all
  • January 8, 2025

    OceanScore to launch combined EU ETS and FuelEU solution in Singapore

    Hamburg-based technology platform OceanScore will introduce the Compliance Manager, its new solution that will help effectively manage FuelEU Maritime Regulation and EU Emissions Trading System (EU ETS) on one platform, in Singapore. Albrecht Grell, Managing Director, and Leo Grayson, Head of Commercial, APAC, will discuss the FuelEU regulation in depth, what it means for Asian players, and best practices and strategies for efficient compliance. The event will be held from 3 to 5pm (Singapore time) on 23 January. The venue of the event will be at OceanScore Singapore, c/o Blue Net Chartering Asia Pte. Ltd., 20 Cecil Street, PLUS, #24-02.
    Read article
  • December 5, 2024

    OceanScore reviews the first year of EU ETS: what have we learned and what lies ahead?

    OceanScore says many shipping companies struggle to track whether invoices have been accepted, EUAs delivered or payments made without a centralized system. OceanScore client Hammonia Reederei states: "As a high-quality third-party manager, transparency is at the core of how we work with our customers - no hidden charges, no hidden fees. Managing ETS exposure across multiple owners and charterers is a complex task, but OceanScore's ETS Manager has made it efficient and straightforward. Their solution not only streamlines our processes but also helps us provide clear, transparent cost breakdowns around ETS compliance to our customers, reinforcing our commitment accountability to trust and accounting. Looking ahead, Grell says "temporary solutions may suffice for now in tackling some of these challenges, but they are not sustainable long-term", especially with implementation of FuelEU from next year that he believes will amplify pressure for automated data-driven systems to cope with the complexity. "The lessons from these challenges highlight the need for systematic, scalable solutions to manage emissions compliance effectively, ensuring long-term success under the EU ETS framework. The growing need for robust tools is clear. Transparency, efficiency and collaboration across stakeholders will be crucial to tackle the challenges ahead," he concludes.
    Read article
  • December 2, 2024

    UK eyes expanding its ETS to deepsea shipping – closing EU loophole

    Apart from the hit to the EU’s decarbonisation goals, OceanScore MD Albrecht Grell said the UK loophole would tie-up ship capacity, inflate freight rates and could cause disruption as carriers queue up at UK ports. “We need to consider that UK ports do not have the capacity to handle significant increases in throughput, so more port congestion, time lost, would have to be considered,” he said. Mr Grell added that he did not expect the loophole to last for long at any rate, as the EU is planning to review its ETS from 2026.
    Read article
  • November 29, 2024

    OceanScore reviews BIMCO FuelEU clause for time charter parties

    The current BIMCO draft provides a foundation but leaves substantial room for improvement and charter party specific clarifications, said Hamburg-based technology platform OceanScore on Wednesday (27 November). OceanScore added it is already working with customers to implement forward-thinking FuelEU strategies that fill these gaps, supporting smart decision making and efficient processes between the different stakeholders.
    Read article
  • November 14, 2024

    OceanScore supports tricky bunker selection process under FuelEU Maritime

    “Fuel selection is the most important lever under FuelEU,” said OceanScore Managing Director, Albrecht Grell. “Your choice of fuel can either create a surplus or a deficit in your compliance balance, directly affecting your costs.” Grell added: “Choosing the right fuel can help avoid penalties and even create revenue by pooling surpluses. But not all alternative fuels are the same, and their viability often depends on future pooling prices, which are hard to predict.” FuelEU charts a course for reducing emissions in shipping, with a target near net-zero by 2050. For now, two main options are available to meet the greenhouse gas (GHG) threshold of 89.3g CO2e/MJ until 2029: LNG and LPG: These fuels, when used in dual-fuel engines, will meet the rules and can generate surplus compliance balances. However, their benefits will decline until 2040 as limits tighten. Biofuels: These are a good option for most vessels. They are usually used in blends (eg. B20-B30) with conventional fuels. These blends will be compliant until 2040; higher blends or pure biofuels will be needed thereafter. One issue is that EU ETS and FuelEU Maritime treat biofuels differently. Under EU ETS, biofuels are considered zero-emission, meaning companies do not need to buy carbon credits. But under FuelEU, the rules are stricter. “FuelEU doesn’t count all biofuels equally,” Grell explained. “Fuels made from food or feed crops are treated like conventional fuels in terms of emissions. Only waste-based biofuels are fully compliant, and even then, their specific GHG values are above zero.” This difference matters. Standard biofuels, such as those from rapeseed or sunflower seeds, still benefit from ETS discounts but fall short under FuelEU. For full compliance, waste-based biofuels are needed, such as those from used cooking oil or animal fat. Further complications are added when considering the different rules behind the 50% discounts applied to voyages to and from the EU under the two regulations. OceanScore, which provides advanced solutions to facilitate efficient regulatory compliance, is assessing the impact of alternative fuels based on their relative carbon intensities, calorific values (LCVs), prices, and ETS cost incurred, reflecting these in its FuelEU Planner. The challenge goes beyond selecting fuels with low GHG intensity and factors such as the vessel's ice class or whether voyages are intra-EU or international also influence compliance balance. If companies bunker more expensive alternative fuels like biofuels, there is no guarantee it will always pay off. “FuelEU allows for pooling of compliance surpluses and deficits,” Grell added. “Surpluses generated by using compliant biofuels can be sold in the compliance market to vessels in deficit.” OceanScore’s analysis indicates that the compliance market will be in surplus by 1 January 2025. “This surplus will put downward pressure on pooling prices, meaning it might be cheaper to buy a compliance surplus in the pool rather than generate it through compliant bunkering on your own vessels,” Grell said. “Both approaches would be compliant with FuelEU regulation and need to be considered at least from a commercial angle.” Given this, any sound compliance strategy must look beyond fuel selection alone and consider the broader market dynamics. “Our FuelEU Planner integrates these variables into a comprehensive scenario simulation,” continued Grell. “This is crucial because tackling FuelEU successfully requires charterers, managers, and owners to collaborate using a shared, fact-based approach.” Grell outlines several key steps for shipping companies to optimise their compliance strategies. First, they must gain a thorough commercial understanding of the economics of different fuels, considering their prices, LCVs, EU ETS costs, and the cost of pooling FuelEU compliance balances. At the same time, the technical and operational feasibility of using biofuels across different vessels should be assessed. While tests so far indicate that biofuels can be used without significant issues, lingering concerns over engine compatibility and tank systems remain. “Engine manufacturers need to give the green light, and bunker providers must be identified in key ports,” Grell noted. “For now, many companies focus biofuel usage on a smaller portion of their fleet to simplify operations and reduce risks.” However, one of the biggest hurdles remains contractual. “How do you protect the DOC holder, who is responsible for penalties, from the fuel decisions of the charterer? How do you fairly share the costs of biofuels and the value of surpluses? And how do you manage uncertainties tied to deployment patterns and fuel accountability under FuelEU?” Grell asked. Without clear contractual terms, companies risk major financial and operational pitfalls. “To align incentives across owners, managers, and operators, you need clauses in agreements like Shipman and Charter Parties,” he stated. “The ‘polluter pays’ principle is not embedded in FuelEU, so a robust data-driven understanding of the entire value chain is essential to avoid costly disputes.” OceanScore’s FuelEU Planner provides a clear path through the complexity. By simulating fuel use, compliance costs, and pooling options, the tool enables companies to budget effectively and negotiate data-driven contracts. “We make the complex FuelEU regulations easier to manage,” Grell concluded. “With our solutions, companies can understand the commercial impacts of their fuel choices, gain full transparency and confidently manage their compliance strategy.” You might also like Veolia, Enagás, and Barcelona City Council inaugurate first urban cold recovery network from LNG terminal
    Read article
  • September 12, 2024

    OceanScore calculates €175m potential costs for Greek shipping with FuelEU Maritime

    Greek shipping companies are set to face a total bill of over €175m in penalties incurred under FuelEU Maritime after it takes effect next year but can also capitalise on the use of alternative fuels both to curb their financial exposure and generate compliance surpluses, according to OceanScore.
    Read article
  • September 11, 2024

    OceanScore Pulls Crowd with Launch of FuelEU Planner Amid SMM

    OceanScore has launched a new planning, simulation and budgeting tool for optimising compliance with FuelEU Maritime from a commercial standpoint. Its FuelEU Planner is the first in a suite of solutions geared to supporting complex decision-making processes with the upcoming regulation.
    Read article
  • September 3, 2024

    OceanScore closes €5m funding round to speed up global expansion and product innovation

    OceanScore, global provider of data and compliance management solutions for the maritime industry, has successfully closed an oversubscribed €5 million Series A financing round. The influx of new capital will enable the company to further develop its solutions portfolio and expand its global footprint.
    Read article
  • August 16, 2024

    Shipping Faces €1.345bn In FuelEU Penalties In 2025

    The upcoming implementation of FuelEU Maritime has shipping companies on high alert due to potential penalties for non-compliance with greenhouse gas (GHG) intensity reduction targets, says the Hamburg-based provider of compliance and data solutions, OceanScore.
    Read article
  • August 1, 2024

    OceanScore inaugurates new office in Singapore

    OceanScore has opened a new office in Singapore to serve its regional clients, responding to the growing demand in Asia for its digital solutions designed for efficient regulatory compliance with the EU ETS and FuelEU Maritime.
    Read article

    Ensure Your Shipping Operations are Compliant and Sustainable

    Login
    Contact us