Why “Generated Surplus” under FuelEU Maritime Is a Misleading Concept

Each week, more stakeholders enter the FuelEU Maritime pooling market, and with it comes growing uncertainty about what can and should be traded. One recurring misconception is the idea of trading only “already generated surplus.” While it seems like a cautious approach to not buy something that doesn't exist yet, it overlooks the annual nature of FuelEU Maritime compliance.

FuelEU Calculations & Annual Energy Consumption

FuelEU Maritime does not measure compliance at any single point in time. It assesses each vessel’s greenhouse gas (GHG) intensity over the full reporting year (January–December). Surplus and deficit positions are officially calculated once annually, based on the total energy mix used throughout the year, including all fuel types and technologies. If a vessel burns biofuel early in the year to create an apparent mid-year surplus but switches to fossil fuels later, that surplus will shrink by year-end. A “generated surplus” in June is not an independent, fixed figure and should not be considered a secure compliance asset

Calculation Example: Generated FuelEU Surplus

Let’s illustrate this point with a real-world example using the BetterSea FuelEU Calculator:

• From January to June, a vessel consumes 5,000 tonnes of HFO and 1,000 tonnes of Bio100 (with a 65% RED reduction), generating a validated surplus of about 1,600 t CO2e.

• A buyer sees this, acquires the surplus, and believes their compliance is sorted.

• In the second half of the year, the vessel burns 6,000 tonnes of HFO only more.

• By year-end, surplus drops to about 1,000 t CO2e, not 1,600 t CO2e.

• During annual verification, a reporting error reveals that the vessel’s total actual consumption was 11,500 t HFO and 1,000 t Bio100, reducing the final verified surplus further to only about 970 t CO2e.

• In this scenario, the buyer is left with only 970 t CO2e. This means the trade is short by 630 t CO2e versus what was thought to be secured. The buyer is facing a FuelEU penalty of around 400,000 EUR (if the seller cannot supply the shortfall) despite having bought a “generated” mid-year surplus.

This clearly demonstrates that mid-year, “generated” or even validated surplus is not a final, legally claimable asset. Only the surplus that remains after full-year operations and official verification matters for compliance purposes.

Surplus Trading Early — The Right Way

Another misconception is that waiting until year-end (or until after verification in March) to trade is safer. From a pure compliance perspective, this may be true, but the commercial reality suggests otherwise. FuelEU surplus trading is a multi-layered legal and financial challenge.

• As the compliance deadline nears, demand for surplus likely rises and so do prices. Early in the compliance cycle, there is more supply liquidity and rates have proven to be lower.​

• The FuelEU market allows companies to bank surplus for future years as surplus does not expire. If you secure more than needed now, you can store it for later compliance, giving you both a hedge and cost predictability as well as increased security against surplus trade shortfalls .​

To enable early surplus trades and unlock commercial advantages, the right legal and financial frameworks are essential to protect all parties involved. Contracts must address liability, shortfalls, and delivery obligations in detail. Escrow accounts or other secure payment arrangements provide added security. Similarly, working with the right pooling partner, ideally a vessel operator with a proven, surplus-generating profile, can minimise risk and uncertainty (see previous newsletter). These safeguards are far more effective than focusing on whether a surplus is “already generated”.​

Practical Advice for Buyers

Until the end of the reporting year and official verification, all surplus is provisional. Insisting on only “already generated surplus” provides a false sense of security and can expose buyers to unnecessary commercial risk. The smarter approach is to assess vessel performance, prioritise early trades, vet your counterparties, and structure your contracts to maximise both compliance and commercial benefit.

In summary, the real security in FuelEU Maritime compliance comes not from the illusion of “generated surplus,” but from early, well-structured trades, clear legal contracts, strong financial safeguards, and careful selection of reliable pooling partners.

• Don’t fixate on “generated surplus.” What matters is the final, verified surplus and the overall reliability of your counterparties.

• To further reduce risk, focus on working with by default surplus-generating vessel types (e.g., LNG, bio-LNG) where year-on-year compliance is consistent and collateral risk is lower.

• Trade earlier rather than wait. The market’s best deals are found before the year-end rush, and surplus can always be banked.​

• Robust legal and financial frameworks, including, e.g., escrow setups and comprehensive contracts, are your best defences against shortfalls and disputes.

• Choose the right pooling partner. Ensure that your pooling partner has operational and/or technical control over the vessel and consistent access to frequently updated emission and consumption data.

BetterSea's FuelEU Maritime Platform transparently connects you to sellers, highlighting the seller's industry role, data availability, and accuracy. It provides a streamlined, end-to-end post-trade process with standardised contracts and additional financial security. Trade surplus with reduced risks, no additional intermediaries, and the transparency you need to make the right decision.

Best regards,

The BetterSea Team

Contact Us: info@bettersea.tech

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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!

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