FLORAS

FuelEU Maritime regulation, part of the European Green Deal, addresses well-to-wake emissions (full value chain) and accounts for CO2 equivalent (CO2e), including other greenhouse gases such as CH4 and N2O. It aims to reduce carbon intensity by 2% in 2025 (from 91.6 to ~89 gCO2e/MJ) and is intended to promote the use of alternative fuels. In contrast, EU ETS (effective for shipping since January 2024) focuses on tank-to-wake emissions (ship-specific), covers only CO2, and requires ship owners to buy EU allowances. FuelEU regulations apply to all passenger and cargo ships over 5,000 GT, regardless of flag, calling at EU/EEA Ports.

FuelEU imposes a €642 per ton CO2e penalty for non-compliance, which funds the European Maritime Innovation Fund to develop alternative fuel infrastructure (e.g., biofuels, RFNBOs) at key European ports. This penalty is significantly higher than for other regulations and is intended to encourage ship owners and managers to bunker biofuels or use a pooling arrangement to allow average compliance across the pool.

Article 21 of the FuelEU Maritime Regulation outlines the principles of pooling compliance balances, allowing vessels to share their compliance surpluses and deficits to meet the regulation's targets. This mechanism enables vessels less capable of finding technical compliance options to still comply with the regulation's goals.

Pooling allows ships using alternative fuels (e.g., bio-LNG, marine B30 biofuel) to generate surplus compliance units by achieving a carbon intensity below the target (~89 gCO2e/MJ) which can be offset against non-compliant ships. Ship owners and managers can buy these compliance units from us to offset their ship’s deficits, thereby avoiding penalties (€642/ton) or the need to burn costly biofuels with limited shelf life. This is a cost-effective desktop compliance option, especially for ships unable to use biofuels due to operational limitations or trade routes.

The ship’s ISM DOC Managers are legally responsible for collecting and verifying emissions data from 1 January to 31 December in each compliance year. In practice, data pursuant to the ship’s approved monitoring plan will be uploaded to the THESIS database on a voyage-by-voyage basis. Submission of the annual FuelEU report to the ship’s Verifier is due before the end of the following January. The verifier will check, return to the ship’s managers if required, and verify the ship’s positive or negative FuelEU Compliance balance before the end of March. The Verifier is responsible for updating the THESIS database accordingly.

The exact calculation of the FuelEU penalty charge is complex and is calculated for each leg that the vessel enters or leaves an EU port and is based on the exact specifications of the fuel(s) used. To get an accurate calculation, owners should consult their THESIS account and their FuelEU Verifier.

FuelEU is calculated on Well to Wake (WtW) emissions above a benchmark set for each reporting year, as opposed to the entire emissions with ETS

Whilst the ETS Tank-to-Wake (TtW) emission multiplication factor is 3.114 times the tonnage of fuel used, the equivalent FuelEU WtW emission multiplication factor is approximately 0.10. That is to say that for every MT of fuel used, there are 0.10 tCO2e emissions above the 2025 FuelEU benchmark.

If we take an example of a vessel which arrives from outside the EU, spends 12 days sailing in the EU with a second port call and then sails back outside again. Assume the vessel burns 20MT per day and ignore energy used whilst in port:

Into EU (50% allowance as coming from outside EU):

- 30 days x 20 MT Fuel / day x 50% = 300 MT Fuel in scope

- 300 MT x 0.10 = 30 tCO2e Fuel EU Compliance Balance

EU to EU (no allowances):

- 12 days x 20 MT Fuel / day = 240 MT Fuel in scope

- 240 MT x 0.10 = 24 tCO2e Compliance Balance

Out of EU (50% allowance as leaving the EU):

- 20 days x 20 MT Fuel / day x 50% = 200 MT Fuel in scope

- 200 MT x 0.10 = 20 tCO2e Compliance Balance

Total compliance balance on which penalties may be raised is 30 + 24 + 20 = 74 tCO2e or a potential penalty of 74 x €642 = €47,508

Intra-EU/EEA voyages (between two European ports) are 100% covered. Voyages between a non-EU/EEA port and an EU/EEA port (e.g., Singapore to Rotterdam) are 50% covered. Voyages without an EU/EEA port call or involving only bunkering (no cargo operations) are exempt. Exemptions also apply to certain routes involving small islands (population <200,000) or voyages with safety risks (e.g., capsizing).

Owners can estimate deficits using past MRV emission data, ongoing FuelEU data uploaded to THESIS or third-party platforms we can recommend, such as FuelTrust.

STX generates large surplus volumes through strategic partnerships and hedging, securing compatible fuels at lower costs. They provide a Guarantee of Surplus Allocation Certificate, ensuring compliance. If STX fails to deliver, they pay any penalty on the client’s behalf, thereby minimising risk.

a. During the course of a compliance year, a ship owner will purchase compliance units for his fleet, normally based on his estimated year-end compliance deficit.

b. The ship owner will receive a guarantee from STX confirming:

• A guaranteed place in an STX pool at the end of the compliance reporting period

• A guaranteed number of compliance units (tCO2e) to be utilised and credited against his ship(s) in that pool.

• A guarantee that STX will cover all penalties in the event that it fails to provide (i) and (ii) above.

c. The ship owner will continue to record his emissions data in the EU THETIS database on a voyage-by-voyage basis and monitor his predicted year end deficit as the year progresses. Additional compliance units may be purchased if required (at the price ruling at the time).

d. In the event of any compliance unit surplus, these surpluses may be carried forward to the following year.

e. Many owners will look to take advantage of competitive compliance unit pricing and purchase additional quantities as a hedge against liabilities in future Compliance years.

f. Following the end of the Compliance year, the owner will submit his FuelEU data on THETIS to his own Verifier for verification. Subject to any deficiencies and amendments, the ship’s Compliance Balance (either positive or negative) will be verified and noted as such on THETIS.

g. Once the Compliance Balance has been verified the owner will confirm the availability of his ship(s) to join the nominated STX pool (noting that a ship may only join a single pool in any compliance year)

h. STX will then allocate the purchased Compliance Units to the owner’s ship(s) in accordance with his instructions. Following the allocations throughout the pool, the pool’s independent Verifier will confirm that each ship in the pool had either a satisfactory or a deficit balance.

i. In the event of a satisfactory balance the ship will receive a Document of Compliance (DOC) and any positive balance will be rolled over into the next (it will be current at the time) Compliance Year.

j. In the event of a deficit balance, the owner will need to pay the penalties to his Administrative State (as established when he set up his THETIS MRV to comply with the ETS regulations). Upon payment of the penalties, the Administrative State will issue the ship’s DOC.

Whilst clients will need to commit to a number of Compliance Units, they will not have to nominate the actual ship(s) until the end of March following a compliance year when each vessel has a verified Compliance Balance value. This provides a high degree of flexibility.

FuelEU data is normally uploaded to THESIS on a voyage-by-voyage basis, so any projected shortfalls may be covered by purchasing additional Compliance Units at the price ruling at the time, rather than suffering the penalty for non-compliance.

In the event that a client still has surplus Compliance Units, these can be rolled forward for the following year. This rollover facility can also be used for hedging purposes or to cover fixed price requirements in period time charters.

If a ship does not opt to use one of the recognised Flexibility Mechanisms and it completes the year with a verified negative balance, then the owner must approach their administrative authority and pay the penalty at a rate of €642 per tCO2e. Their administrative authority will issue the ship’s Document of Compliance after the penalty had been paid.

If the ship ends the subsequent year with a negative compliance balance and again does not opt to use one of the Flexibility Mechanisms, then the penalty will increase by 10% to €707 per tCO2e and by a further 10% for each subsequent year that penalties are due.

If a ship changes ownership (strictly ISM DOC management as opposed to legal ownership), then these penalties are not carried forward.

Purchasing Compliance Units can show savings of more than 50% of the FuelEU penalty charge, if purchased early in the compliance year. An early commitment locks in a fixed price for the year, avoiding volatility, and flexible payment terms (30% prepayment, followed by quarterly payments until December) spreading the cost over the year. While we cannot guarantee future market prices, it is a fact that surplus generation possibilities will diminish over time and this will likely push up the price of Compliance Units as the year progresses.

Delaying until the end of a compliance year means that we cannot guarantee pool spot availability and owners risk higher Compliance Unit prices due to limited generation capacity and increased year end demand. It is likely that the Compliance Unit costs will be higher than they were during the year.

The minimum purchase quantity is 500 tCO2e. Volume discounts are more likely to be available the earlier the commitment in the compliance year. Owners always have the flexibility to roll over any surplus units into the following year. Owners have the ability to hedge their future year commitments to avoid price increases and volatility or to cover long term charter party obligations at a fixed price.

Biofuels are 1) relatively expensive, 2) relatively hard to find (as of May 2025) and 3) have a relatively short shelf life. Compliance units and pooling are a desktop solution which avoids both the cost and operational challenges of bunkering biofuels. Cost saving more than 25% can be anticipated if the Compliance units are purchased early in the compliance year.

The minimum volume of Compliance Units for competitive pricing is 500 tCO2e. Discounts may be available for larger quantities.

Yes, ship owners can create internal pools if they have ships burning biofuels that generate surplus units to offset deficits within their fleet. The process is set out in detail in the regulations. Owners can also sell excess surplus to STX, provided the price aligns with STX’s cost strategy.

“BIMCO FuelEU Maritime Clause for Time Charter Parties 2024”, covers a wide range of situations and it is assumed that most owners will have incorporated this or a similar clause in their charter parties. Whilst charterers provide bunkers and are generally responsible for FuelEU compliance, those with ships on period charters are more likely to have made their own FuelEU arrangements. That said there may be occasions when, by negotiation, charterers may agree to owners pooling the ship and sharing the cost saving benefits.

For ships on TCT charterers are more likely to agree to pay the FuelEU fees and consider them as voyage expenses. This gives owners an opportunity to either share the benefits with their charterers or to profit from their foresight.

For spot ships purchasing Compliance Units will directly reduce the voyage costs.

Owners with significant FuelEU exposure (in excess of 500 tCO2e) on TCT and Spot vessels can look to close off their known 6 monthly liabilities at a profit, having received the full penalty cost as an expense from their charterers.

We offer a high degree of flexibility up until the end of March following the end of the Compliance year. The key point is that while the quantity of Compliance Units are secured within an STX Pool, allocation of specific vessels only begins when the ship’s compliance balance is known. This gives owners the flexibility to adjust their pooling strategy during the compliance year, when the ship may shift between spot and time charter arrangements. That said, the contractual obligation to pay for the secured volume of Compliance Units and pool spot(s) remains binding, regardless of allocation status.

There are a few practical solutions we offer for owners in these situations:

1. Conflict with Charterers' Strategy: If the charterer is not aligned with joining the STX pool, an owner can instead allocate another vessel from their fleet. Allocation isn’t tied to a specific ship until the following March, so the owner has the flexibility to swap vessels in or out of the pool as needed based on operational or commercial decisions.

2. No Alternative Vessel for Allocation: In cases where the owner has no other ships to allocate, they can bank the surplus generated on the pooled ship(s). And if the owner eventually exits the market entirely (e.g. through fleet divestment), the surplus can be sold back to STX—offering a way to recover the value of the pooled compliance position.

3. Sale of a Ship Already in the Pool: If the owner sells a vessel that has secured pool spots, this cost can be factored into the sale under a dedicated FuelEU clause as the new owner becomes liable for FuelEU compliance for the whole compliance year. If the buyer is interested in continuing participation in our pool, we can support integration into the contract structure to ensure a smooth transition.

Compliance Units have to be generated and as the compliance year progresses, there are fewer opportunities to do so. The rate of supply will therefore contract over the course of a compliance year. Pools require that the compliant exceed the non-compliant. Fewer opportunities will be available as the compliance year progresses as ship owners and managers purchase the limited pool of Compliance Units. Whilst one cannot accurately predict future prices, it is likely that they will increase due to increased demand and diminishing supply. Early movers secure more competitive fixed prices with flexible payment terms, avoiding future end of year volatility.

Yes, all surpluses are generated entirely from shipping resources by using alternative fuels (e.g., bio-LNG) to reduce carbon intensity below the FuelEU target (89 gCO2e/MJ), as non-shipping carbon units or credits are not allowed under the regulation.

STX is a global environmental commodity trading company, established in 2005 with a significant balance sheet. It has large-scale surplus generation, competitive pricing, and regulatory foresight via policy experts in Brussels. Unlike startups, STX offers stability, lower prices and a Guarantee of Surplus Allocation, reducing risks and price volatility. Full financials are available to clients.

STX provides a Guarantee of Surplus Allocation certificate, ensuring compliance, and if they fail to deliver, they cover the penalty (€642/ton CO2e) on the client’s behalf, a unique offering.

Under the FuelEU Maritime framework, anonymity of pool participants is maintained, and vessel-specific emissions data from other participants cannot be disclosed. However, we can share details of the specific vessels assigned to a contract, along with the respective surplus volume they generate for assurance. It's worth noting that we apply stringent selection criteria for surplus-generating vessels, including KYC, sanctions checks, financial stability, Paris MoU performance, CII ratings, and Poseidon Principles alignment. This ensures that our pools remain both clean and credible.

STX has policy experts in Brussels who monitor regulatory changes, ensuring clients are informed ahead of market shifts. They are also preparing for the IMO’s Global Fuel Standard (GFS), effective 2027, which will introduce a similar surplus/remedial unit mechanism globally. Clients will be kept update with the latest developments as part of DK2’s relationship.

An uncommitted facility that is a pay-as-use facility. This is a revolving line and the amount of the Facility determines the maximum available amount available to the ship operator. There can be multiple Advances outstanding at any given time (up to the maximum amount of the facility). The typical loan facilities are US$1.0-US$5.0m.