EmissionLink has warned shipowners and operators that waiting until September to secure and transfer EU Allowances (EUAs) is creating unnecessary financial, commercial and compliance risk as the EU Emissions Trading System (EU ETS) enters its next phase.
Philippos Ioulianou, EmissionLink MD, said: “The problem is not the September deadline itself, but the industry’s habit of waiting until the last possible moment. This can push critical funding and compliance decisions to the brink and leave owners, managers and compliance providers carrying significant exposure.”
Following the first FuelEU Maritime compliance cycle, operators must surrender EUAs covering their verified emissions before the end of September. However, EmissionLink says current practices between owners, charterers, managers and intermediaries can leave significant exposure unresolved until shortly before the deadline.
Many charter parties, including those incorporating BIMCO emissions trading provisions, allow charterers to transfer EUAs relatively close to the surrender date. While commercially flexible, EmissionLink says this can leave the party responsible for compliance exposed if allowances arrive late or are not transferred at all.
Ioulianou added: “Owners may be reluctant to buy allowances because the charterer is contractually liable, while charterers may delay because the contract permits them to. In the meantime, the company responsible for compliance remains accountable to the regulator so that mismatch creates avoidable market risk.”
The issue is thought to be increasingly significant as the EU ETS phase-in accelerates. The scheme covered 40% of shipping’s verified emissions for 2024, rising to 70% for 2025 and 100% for 2026. EmissionLink recommends verified emissions reports should therefore be treated as an early financial risk indicator rather than simply part of an annual administrative process.
Once verified emissions are known, owners and operators should quantify their EUA exposure, agree the allocation with charterers and establish clear transfer dates well ahead of September. The company is calling for charter-party arrangements to move away from a last day approach to EUA transfers, with earlier milestones and clearer remedies for late delivery and associated costs.
Owners should also identify and purchase any known residual exposure at an early stage. This can include allowances arising from off-hire periods, operational adjustments or disputes, even where the owner’s eventual share represents only a small proportion of the vessel’s total liability. Delaying these purchases can expose companies not only to counterparty risk but also to movements in EUA prices.
Ioulianou concluded: “EUAs now need to be treated as a core part of voyage economics, counterparty management and liquidity planning, not as a September administrative task. As exposure reaches 70% and then 100%, earlier allocation, earlier transfers and proactive purchasing will become essential to credible carbon compliance.”
According to EmissionLink, by centralising emissions exposure, allowance allocation and transfer tracking, operators can gain earlier visibility of potential shortfalls and reduce the risk of a last-minute compliance scramble. As EU ETS exposure moves towards 100%, EmissionLink is calling for earlier allocation, earlier transfers and proactive purchasing as essential elements of effective carbon compliance and commercial risk management.
Image: Philippos Ioulianou, EmissionLink MD (source: EmissionLink)
