92% of Vessels Chose Pooling in First Year of FuelEU Compliance. File Image. Image Credit: Ship & Bunker

• 92% of vessels used pooling in first year of FuelEU Maritime reporting, just 2% used borrowing
• Compliance surplus averaged around EUR 208/tCO2eq, well below the EUR 640/tCO2eq penalty
• LNG estimated to have delivered around a third of required reductions, biofuels the rest
• First-year results show a fuel standard for shipping can work ahead of IMO talks, says Skuld analysis

Pooling has emerged as the dominant compliance route in the first year of FuelEU Maritime reporting, with 92% of vessels using the mechanism, according to an analysis by P&I club Skuld.

The analysis, authored by Skuld's decarbonisation and transition risk lead Matias Bøe Olsen, draws on European Commission data and the Maersk Mc-Kinney Møller Center for Zero Carbon Shipping's review of the first reporting year, alongside an interview with the Center's climate policy manager Joe Bettles.

Just 2% of vessels used the borrowing mechanism, which defers a compliance deficit to the following year for a 10% surcharge, with the remainder either paying the penalty or meeting the target directly with LNG or other low-GHG energy sources.

The price of compliance surplus averaged around EUR 208/tCO2eq and remained relatively stable through the year, suggesting the market matured early, with buyers generally able to find sellers.

"The prices for trading compliance surpluses remained well below the EUR 640/tCO2eq penalty for VLSFO, making the pooling mechanism significantly more attractive than paying the penalty," Bettles said in the interview.

The Center estimates that 3.22 million tonnes of CO2-equivalent reductions, relative to an all-VLSFO fleet, will be needed to meet the 2% reduction target between 2025 and 2029, with LNG contributing around a third of the reduction so far and biofuel blends, dominated by biodiesel and bio-LNG, accounting for the remainder.

"Although LNG is not a drop-in replacement for VLSFO, the pooling mechanism under FuelEU allows an LNG-fuelled vessel to share its over-compliance with other vessels that cannot physically use LNG," Bettles said.

"Depending on the engine type in the ship, LNG can remain compliant with the 14.5% reduction target through 2039 and can further extend its compliance through banked surplus or by using liquified biomethane."

The first-year results carry weight beyond Europe, according to Bettles, as IMO member states prepare to resume negotiations on the Net-Zero Framework.

"FuelEU demonstrates that it is possible for the global fleet to comply with a GHG intensity regulation using existing fuels and providing incentives for the uptake of cleaner energy sources," he said.

The analysis draws three lessons from the first reporting year: a fuel standard for shipping can work, regulations should include mechanisms supporting a broader mix of energy sources given the limited showing of wind-assisted propulsion, e-fuels, and onshore power, and policy stability with clear reduction pathways supports the business case for investment in cleaner alternatives.

Skuld is a Mission Ambassador to the Center, supporting its work on collaboration and knowledge sharing across the maritime value chain.