Stricter EU Decarbonization Policies to Drive Up Shipper Costs, Warn Carriers

Carriers have issued a stark warning to shippers, signaling that the cost of complying with new European Union (EU) environmental regulations will significantly impact shipping expenses in the coming years. This is primarily driven by the expansion of the EU’s Emissions Trading System (ETS) and the implementation of the FuelEU Maritime regulation.

The ETS, a cornerstone of the EU’s climate policy, is set to dramatically increase costs for carriers starting in 2025. The system, based on a “cap-and-trade” principle, requires ship operators to purchase and surrender EU Allowances for every ton of CO₂ emitted during voyages within its scope. The scope of ETS regulations is broadening to cover 70% of carriers’ emissions in 2025, up from the 40% required in 2024. This expansion will lead to substantial increases in surcharges for shippers, with Hapag-Lloyd, Maersk, and CMA CGM forecasting sharp rises in their ETS-related fees.

Hapag-Lloyd has projected its ETS surcharge to approximately double, citing the growing regulatory burden and the associated costs of fuel bunkering for compliance under the FuelEU Maritime directive. Similarly, CMA CGM anticipates a 75% increase in ETS-related charges and plans to release updated surcharge details by December 1. Maersk has echoed these expectations, warning that its ETS surcharge for the first quarter of 2025 will nearly double compared to 2024 levels. The carrier also highlighted additional cost pressures from other anticipated global regulatory measures.

The ETS applies to journeys starting and ending within the EU, as well as intra-Europe trade routes. Full emissions will be taxed for voyages entirely within the EU, while trips starting or ending in the bloc will be subject to charges for 50% of their emissions. The share of emissions covered under the ETS will rise progressively, reaching 70% in 2025 and 100% in 2026. According to Hapag-Lloyd, this stepwise increase, coupled with the rising price of emission allowances driven by supply restrictions, will substantially elevate costs.

Complementing the ETS, the FuelEU Maritime regulation, effective from January 1, 2025, imposes additional obligations on carriers. Under this directive, vessels operating within the EU or European Economic Area (EEA) must progressively reduce the greenhouse gas (GHG) intensity of their fuel usage. The initial reduction target is set at 2% below the 2020 baseline, with requirements intensifying every five years to achieve an 80% reduction by 2050. Penalties for noncompliance are steep, with ships facing fines of €2,400 per metric ton of fuel that fails to meet the mandated intensity standards.

This regulation forms part of the EU’s broader Green Deal, which aims to reduce GHG emissions by at least 55% by 2030 under the “Fit for 55” initiative. It applies to all fuel consumption for voyages and port calls within the EU or EEA and 50% of the fuel used for trips entering or exiting the bloc. To meet these standards, carriers must shift to cleaner energy sources, such as biofuels, which are priced at a premium compared to traditional marine fuels.

While several shipping companies have begun offering services powered by biofuels, these come with higher costs. However, the reduced emissions associated with biofuel usage can exempt shippers from ETS surcharges, providing a potential avenue for mitigating some of the financial impact. Despite this, carriers have made it clear that the dual implementation of the ETS expansion and the FuelEU Maritime regulation will present significant challenges and costs for the industry.

PNG Worldwide remains fully committed to supporting global efforts to minimize emissions and operate sustainably. As part of this commitment, we meticulously track the emissions for every shipment we handle. By actively monitoring our carbon footprint, we aim to not only comply with stringent regulations but also play a proactive role in reducing environmental impact. Our dedication aligns with the broader industry goal of achieving greener, more sustainable shipping practices while continuing to provide exceptional service to our customers.

The evolving regulatory landscape underscores the urgency for both carriers and shippers to adapt. As the EU intensifies its efforts to combat climate change through these measures, the shipping sector must navigate rising costs and operational challenges while transitioning towards greener and more sustainable practices.