The first full reporting cycle of the European Union’s FuelEU Maritime regulation has revealed a market dynamic that could undermine the policy’s core objective, according to an opinion piece by Philippos Ioulianou, Managing Director of EmissionLink, published by Ship & Bunker.
As the initial compliance period closed at the end of June, Ioulianou notes that surplus prices in the FuelEU compliance market fell more sharply than many had anticipated. This trend, he writes, is making it increasingly affordable for shipowners to purchase compliance surplus rather than invest in lower-carbon fuels such as biofuels.
From Pooling Surge to Price Slide
According to Ioulianou, most shipowners engaged with the regulation during its first year, largely favouring pooling arrangements, biofuel use, or a combination of both over accepting penalties. Some operators with limited EU exposure assumed minimal impact, while others delayed action, uncertain whether the pooling market would mature in time.
Ioulianou reports that activity intensified as the compliance cycle closed, pushing surplus prices higher during the pre-deadline period, with figures discussed in the range of €175 to €185 per unit. However, once the main pooling window passed, prices dropped to between €120 and €130, driven by long positions, banked surplus, and stronger-than-expected generation of compliance units.
A Cheaper Path to Compliance
This price decline, Ioulianou explains, means that in some cases, buying surplus compliance units may now cost close to what it would take to generate compliance through biofuel use. While this offers shipowners a more affordable route to meeting obligations, Ioulianou argues it also represents a fundamental problem for the regulation’s intent.
FuelEU Maritime was designed to encourage uptake of renewable and low-carbon fuels. If surplus units remain abundant and inexpensive, according to Ioulianou, operators may opt to purchase compliance rather than burn biofuel—satisfying the regulation’s paper requirements without driving real demand for alternative fuels.
Call for Regulatory Review
Ioulianou suggests that the European Commission and national authorities should evaluate whether current targets strike the right balance between market flexibility and genuine fuel uptake. He warns that continued growth in surplus availability and further price declines could turn FuelEU into what he describes as a low-cost accounting exercise rather than a genuine driver of decarbonisation.
He also cautions shipowners to treat FuelEU as a live commercial market where prices, surplus availability, and biofuel economics will continue to shift alongside geopolitical events and fuel price spreads.
Does this matter to you?
For those tracking compliance costs, pooling strategies, or biofuel procurement decisions, this development signals that FuelEU surplus pricing is proving more volatile and market-dependent than initially expected. Ioulianou’s analysis, as published by Ship & Bunker, indicates that operators relying on year-end pooling decisions may face price swings, limited pooling options, and contractual uncertainty over charterparty responsibility. Anyone monitoring bunker fuel demand trends or alternative fuel economics may find the shifting relationship between surplus prices and biofuel costs relevant to future planning.
Gulf Bunkering does not provide operational or security guidance. This article is for informational purposes only. Operators should consult flag state authorities, P&I clubs, and relevant advisories for decisions relating to transit planning.
Sources: Ship & Bunker (Philippos Ioulianou, Managing Director, EmissionLink)
