As the first FuelEU reporting year closed at the end of June, the company said the regulation had succeeded in creating an active compliance market, with shipowners moving quickly towards pooling, biofuel use, and surplus trading rather than simply accepting penalties.
However, EmissionLink highlights the rapid fall in surplus prices after the main pooling window raises an important question for regulators. If compliance becomes too cheap, will FuelEU still encourage the fuel transition it was designed to deliver?
“FuelEU has worked in the sense that it has created a market,” said Philippos Ioulianou, Managing Director of EmissionLink. “Shipowners have engaged with pooling, biofuels, and surplus trading. That is positive. But if buying compliance becomes easier and cheaper than using lower-carbon fuels, then the regulation risks becoming an accounting exercise rather than a driver of decarbonization.”
According to EmissionLink’s market observations, surplus prices discussed around €175 to €185 per unit during the busy pre-deadline period moved down towards €120 to €130 after the main pooling window closed. The company said this suggests more surplus may have been available than many expected, supported by long positions, banked surplus, and stronger-than-anticipated generation of compliance units.
For shipowners, lower prices reduce immediate compliance costs. But EmissionLink points out that cheap surplus could also discourage some operators from burning biofuel or investing in lower-carbon fuel strategies.
“That is the danger,” said Mr. Ioulianou. “FuelEU was designed to stimulate demand for renewable and low-carbon fuels. If surplus is abundant and cheap, some operators may simply buy compliance units instead. That meets the rules on paper, but it does not necessarily move the industry closer to fuel transition.”
FuelEU should now be treated as a live commercial market, not just a regulatory deadline. Prices, surplus availability, fuel spreads, geopolitical events, and trader positions can all affect the cost of compliance. Mr. Ioulianou urges regulators to review whether the current framework is creating the right balance between flexibility and genuine fuel uptake.
“Cheap compliance may be welcome for shipowners in the short term, but it should not become a substitute for real progress,” said Mr. Ioulianou. “Regulators should study the market sooner rather than later, and shipowners should also learn from this first year. Those with accurate data, clear contracts, and early compliance strategies will be best placed to manage FuelEU as the market develops.”
