The previous two newsletters touched upon different business cases for compliance with FuelEU Maritime, namely biofuel vs pooling and e-LNG. The case studies consider compliance costs under FuelEU Maritime in isolation. For shipping companies, however, maritime decarbonisation compliance costs do not only consist of those relevant to FuelEU Maritime but also EU ETS.
As a reminder, EU ETS is an EU regulation that puts a price on each tonne of CO2 emitted in its scope. Started in 2024, it was introduced with a phase-in period currently (in 2025) covering 70% of CO2 emissions falling under the scope. The main difference when it comes to business cases is EU ETS's focus on tank-to-wake CO2 emissions in contrast to FuelEU's focus on well-to-wake GHG emissions.
Today's newsletter shall discuss the influence of EU ETS on the previous business cases and question whether and when they would be viable from a comprehensive regulatory perspective.
The Previous Case Study IV: The Best Compliance Option for FuelEU and EU ETS
Reminder: The Baseline
A sample containership consumes 10,000 tonnes of HFO within the FuelEU scope. Given its fossil fuel usage, the ship incurs a compliance deficit of 975 t CO2e in 2025 and 1,547,658.00 € in EU ETS compliance costs (considering an EUA price of 71,00 €). The operator faces three choices to comply:
Pay the FuelEU Penalty (€2,400 per tonne of VLSFOe or €640 per tonne of CO2e).
Switch to Bio30 (30% biofuel blend) at an additional €209 per tonne compared to VLSFO (ARA price difference, HBE incentivized as per Feb 7)
Purchase surplus from another ship at a price of €250 per tonne of CO2e surplus***.
Each method has different cost implications and strategic benefits, as shown in the breakdown below.
Option 1: Paying the FuelEU Penalty and EU ETS Costs
Under FuelEU Maritime, ships failing to comply must pay a fixed penalty of €2,400 per tonne of VLSFOe (equal to €640 per tonne CO2e)*. While simple, this is the most expensive option. Additionally, if the vessel remains non-compliant for consecutive years, penalties are further penalized exponentially, creating a growing financial burden.
FuelEU Penalty: 624,000 €
EU ETS Costs: 1,547,658 € (in 2025)
Total Compliance Costs: 2,171,658 €
Option 2: Switching to Bio30
Switching to a 30% biofuel blend (Bio30)** to reach a compliance balance of 0 reduces the vessel’s emissions to meet compliance with FuelEU Maritime. At the same time, it also reduces the EU ETS costs as the tank-to-wake CO2 emission factor for biofuels under EU ETS is 0. Note, that biofuels provide a regulatory-compliant pathway by reducing emissions at the source. However, they come at a premium price and may have supply constraints depending on market availability, and technical challenges. The use of Bio30 would result in:
FuelEU Compliance Costs: 310,365 €
EU ETS Costs: 1,478,787 € (in 2025)
Total Compliance Costs: 1,789,152 €
Option 3: Pooling
Pooling allows companies to purchase surplus from vessels with over-compliance, achieving compliance on the deficit ships at a significantly lower cost***. Pooling does not reduce EU ETS costs. Therefore, the total compliance costs amount to:
FuelEU Compliance Costs: 243,750 €
EU ETS Costs: 1,547,658 € (in 2025)
Total Compliance Costs: 1,791,408 €
Comparing the FuelEU and EU ETS Compliance Costs
In contrast to the previous newsletter only considering FuelEU Maritime, Pooling is not significantly cheaper than using biofuel for compliance with FuelEU Maritime and EU ETS. The comprehensive consideration of compliance costs including the EU ETS creates a level playing field between both options and underlines the importance of combining all relevant compliance costs when creating a strategy. A sensitivity analysis is further helpful as several components, EUA price, surplus value, and biofuel price are volatile. Our free online calculator allows you to compare the compliance scenarios for your very specific use case, access it below:
The Previous Case Study V: When Does e-LNG Become a Good Business Case Considering EU ETS and FuelEU Maritime?
The most recently published case study explored the viability of e-LNG as a FuelEU compliance but also a general maritime decarbonization option focusing on the commercialization options provided through FuelEU pooling. The sentiment of the case study was that e-LNG is a cheaper fuel option compared to fossil LNG at a fuel price of 2,287.48 € per tonne when the surplus value is assumed to be 400.00 €/tCO2e and at a fuel price of 1,769.05 € per tonne when the surplus value is 250.00 €/tCO2e*.
The emission factors applicable for calculating compliance costs under EU ETS are fundamentally differnet from those relevant to FuelEU Maritime due to the regulations focus on tank-to-wake CO2 emissions (in 2025). Further, just as under FuelEU Maritime, e-LNG is considered a Renewable Fuel of Non-Biological Origin (RFNBO) and as such has an emission factor of 0 under EU ETS. Resultantly, all EU ETS related compliance costs vanish when fully switching to e-LNG. The numbers below show the impact of this on the e-LNG business case.
Reminder: The Baseline Fossil LNG Case
For a vessel running on fossil LNG, compliance is determined by its fuel consumption and the applicable emission factor.
Annual fuel consumption: 10,000 tonnes of LNG
Engine type: LNG Diesel (dual fuel slow speed)
Emission factor (Well-to-Wake, fossil LNG): 76.08 gCO2e/MJ
Emission factor (Tank-to-Wake, fossil LNG): 2.75 gCO2e/g
EUA Price: 71.00 € (Feb 20th 2025)
Compliance balance (Surplus): 6,508 t CO2e
Potential surplus earnings (250 €/tCO2e)***: 1,627,000 €
EU ETS Costs (no phase-in): 1,952,500 €
Using standard assumptions, the sample vessel generates a significant surplus of 6,508 t CO2e and additional revenue of 1,6M €, based on a conservative surplus value, but still incurs EU ETS costs summing up to 1,952,500 €.
The e-LNG Business Case Considering EU ETS and FuelEU Maritime
But what if we would fully switch to e-LNG? To evaluate this, we assume 100% e-LNG compared to our initial fossil LNG sample case:
Annual e-LNG consumption: 10,000 tonnes
Engine type: LNG Diesel (dual fuel slow speed)
Emission factor (Well-to-Wake, e-LNG): 11.38 gCO2e/MJ
Emission factor (Tank-to-Wake, fossil LNG): 0.00 gCO2e/g (under EU ETS)
EUA Price: 71.00 € (Feb 20th 2025)
Compliance balance (Surplus): 41,070 t CO2e
Potential surplus earnings (250 €/tCO2e)***: 10,267,500 €
EU ETS Costs: 0.00 €
With 100% e-LNG, the ship significantly increases its potential revenue on the FuelEU surplus market, amounting to 10,267,500 €. At the same time, it reduces its EU ETS costs to 0. Now, how would that influence the break-even price for e-LNG?
Baseline LNG price: 905 € per tonne (Titan weekly in ARA, Feb 14)
Expected e-LNG price: 2,800 € per tonne (Supplier estimate)
Impact of surplus trading and EU ETS on fossil LNG price: +32.55 €/t fossil LNG
Impact of surplus trading and EU ETS on e-LNG price: -1,222.00 €/t LNG mix
Break-even price for e-LNG: 2,159.55 € per tonne
When compared 1:1, the break-even price at which e-LNG would result in the same OPEX costs as fossil LNG is 2,159.55 € per tonne. This is roughly 30% higher compared to the business case just considering FuelEU Maritime (1,769.05 €).
Sensitivity Analysis: How Does Surplus Value Influence e-LNG’s Business Case?
The above analysis is based on a conservative surplus value of 250 €/t CO2e. Since the market is dynamic, it is worthwhile to study a higher-value scenario (400 €/t CO2e)* with steady EU ETS price.
Potential surplus earnings (fossil LNG, 400 €/tCO2e)***: 2,603,200 €
Potential surplus earnings (e-LNG, 400 €/tCO2e)***: 16,428,000 €
Now, these figures change the impact of surplus trading as depicted below:
Baseline LNG price: 905 € per tonne (Titan weekly in ARA, Feb 14)
Expected e-LNG price: 2,800 € per tonne (Supplier estimate)
Impact of surplus trading and EU ETS on fossil LNG price: +65.07 €/t fossil LNG
Impact of surplus trading and EU ETS on e-LNG price: -1,838.05 €/t e-LNG
Break-even price for e-LNG: 2,808.12 € per tonne
The break-even price at which e-LNG would result in the same OPEX costs as fossil LNG at an increased surplus value of 400 €/t CO2e is 2,808.12 € per tonne. This is about equal than today's supplier estimate used for e-LNG in this calculation. The previous newsletter only focused on the compliance cost benefits under FuelEU Maritime and did not show a business case for e-LNG already today, whereas the inclusion of EU ETS costs shifts this picture in favor of e-LNG.
If you are interested in purchasing e-LNG, reach out to us via email — info@bettersea.tech!
Conclusion: The Power of a Comprehensive Compliance Strategy Considering FuelEU Maritime and EU ETS
The outcome of both case studies changes when considering not only FuelEU Maritime but also EU ETS. This underlines the importance of a comprehensive compliance strategy. Looking at each of the regulations in isolation may lead to less accurate conclusions. Further, the volatility of several variables including but not limited to biofuel premium, surplus value, and EUA price enhances the need for a thorough analysis and a continuous update of the best strategy.
BetterSea’s FuelEU Maritime Compliance Platform with integrated marketplace provides you with a fast, streamlined, end-to-end process covering all potential compliance options, including external pooling and surplus trading. It allows you to comprehensively strategize your FuelEU and EU ETS compliance on a ship-specific level amidst volatile markets. Book a demo below!
Stay tuned for more insights on navigating maritime decarbonisation compliance in our upcoming newsletters. If you have any questions or need further guidance, feel free to reach out!
Best regards,
The BetterSea Team
Contact Us: info@bettersea.tech
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*Simplified unit conversion *The analysis assumes an emission reduction for biofuel of 65% compared to 94 g/MJ (as per RED II) and a LCV of 37200 ***Surplus value estimated to be 250 €/t CO2e or 400 €/t CO2e (Disclaimer: This is an assumption)
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