Since the Paris Climate Agreement in 2015, there has been a strong uptake in renewable energy projects. Nevertheless, emissions have steadily continued to rise ever since. Legislators across industries and countries have put in place innovative regulation to bend the curve and limit global warming. Accounting for 2-3% of greenhouse gas (GHG) emissions globally, shipping is on the brink of a significant transformation. With new regulations coming into force, shipowners must navigate a complex landscape of decarbonisation requirements. Damen understands the challenges you face and is here to guide you through these uncharted waters.
The European Green Deal includes the Fit-for-55 programme to reduce 55% of annual greenhouse gas emissions in 2030 compared to 1990, and net-zero emissions in 2050. To meet these ambitions, the maritime industry is facing a wave of new European carbon regulations designed to reduce GHG emissions and promote sustainability. For shipowners, understanding and complying with these regulations is crucial. Here you will find a breakdown of the key regulations, their application criteria, and their impact.
EU MRV (Monitoring, Reporting, Verification)
The EU MRV regulation applies to ships over 5,000 gross tonnage calling at EU ports, regardless of flag. It requires shipowners to monitor, report, and verify CO₂ emissions on a per-voyage and annual basis. This system, in place since 2018, serves as the foundation for the inclusion of maritime transport in the EU Emissions Trading System (ETS). From January 2025, ships between 400 – 5,000 gross tonnage in the segments General Cargo and Offshore will be required to start reporting their emissions to the EU.
EU ETS (Emissions Trading System)
The EU ETS regulation also applies to ships over 5,000 gross tonnage calling at EU ports, regardless of flag. Shipowners need to purchase and surrender emission allowances for each tonne of CO₂ emitted. These allowances are traded in a market price, which means that the price for ETS allowances is volatile and depending on their demand and (yearly reduced) supply. Shipowners will need to submit their verified emission reports to the THETIS-MRV platform, upon which the EU annually auctions allowances for that year. Non-compliance can lead to fines of € 100 per tonne GHG emissions. Outside of the auction, allowances can be traded on the market place. The ETS system incentivises energy efficiency and the use of low-carbon fuels. For a shipowner this means that every tonne of fuel burned within the EU will cost an additional 250 euros in allowances, leading to a price premium of 30-50% at 2024 bunker price levels (see below table).
FuelEU Maritime
Adopted as part of the Fit for 55 package, the FuelEU Maritime regulation promotes the use of renewable and low-carbon fuels. It sets limits on the greenhouse gas intensity of the energy used by ships, encouraging the adoption of cleaner fuels and technologies. The regulation applies to ships above 5,000 gross tonnage. The measure has a progressive nature, initially requiring a reduction of greenhouse gas intensity of 2%, increasing to 80% in 2050. At 2024 price levels this leads to a price premium of 5-10% in 2025, up to a 300% fuel premium in 2050 if no action is taken.
However, the FuelEU penalties go even further. When ships fail to comply to their GHG intensity target reduction for multiple consecutive years, the EU imposes a penalty multiplier, which increases 0.1x every year the ship reports data (calls at an EU-port). This makes the penalty curve even steeper, and at 2024 price levels increases the fuel premium to 10x – 15x the cost of 1 tonne of fuel in 2050 if no action is taken. It is expected that with these penalties, together with subsidy programs for new renewable fuels, the shipping industry will rapidly transition to low carbon operations and pass on any excess costs where possible.
CSRD (Corporate Sustainability Reporting Directive)
The CSRD expands the scope of non-financial reporting to include sustainability information. It applies to large companies that meet two out of three criteria: €40 million in net turnover, €20 million in assets, or 250 employees. Starting in 2025, shipowners will be required to disclose their environmental impact, including carbon emissions, in their annual reports.
Penalties for non-compliance
Non-compliance with these regulations can lead to severe consequences:
Charting a course towards zero emissions
Shipowners can explore various decarbonisation strategies:
Damen Triton Emission Compliance
With close to 100 years of shipbuilding experience, Damen is well positioned to assist shipping companies in overcoming decarbonisation challenges. Our expertise in ship design, combined with EU emission and market data, allows us to offer tailored insights and solutions. In-house innovations like DACS, along with fuel analysis and vessel monitoring solutions, make Damen the ideal partner in setting a course towards a sustainable future. Damen Triton provides emission insights, improves sailing efficiency and harmonizes your energy saving technologies. Together, we can ensure a cleaner, greener, and more profitable future for the maritime industry.
Damen Emission Compliance solution includes:
Looking to monitor and reduce your emissions? Get in touch with the Damen team for more information at sales.triton@damen.com.
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