International frameworks are still taking shape while regional schemes are already reshaping commercial realities. There is a particular difficulty in being asked to commit capital for coming years against a regulatory framework that has not been agreed. That is the position many shipowners occupy as 2026 draws to a close.
The International Maritime Organization’s (IMO) Net-Zero Framework is intended to combine a global marine fuel standard with a greenhouse gas (GHG) pricing mechanism, but the mechanism itself is yet to be finalised. The extraordinary session that was to adopt it adjourned in October 2025, and the Marine Environment Protection Committee (MEPC) 84 in April 2026 closed with agreement to continue negotiating, with the matter due back at MEPC 85 from 30 November to 3 December.. Even on an optimistic path, adoption is followed by roughly sixteen months of tacit acceptance before entry into force. The global mechanism is therefore a late-decade cost event. The regional regimes are a cost event now.
FuelEU Maritime has completed its first compliance year. The European Union Emissions Trading System (EU ETS), which was extended to shipping in 2024, has moved from a phased introduction to full coverage: 40% of reportable emissions surrendered for 2024, 70% for 2025 and 100% from 1 January 2026, now on a carbon dioxide (CO₂)-equivalent basis that brings methane (CH₄) and nitrous oxide (N₂O) into scope. In plain commercial terms, the same ship on the same trade now carries roughly two and a half times the allowance cost it carried in 2024, before any movement in the allowance price itself. Offshore vessels above 5,000 gross tons follow in 2027.
The United Kingdom has extended the UK Emissions Trading Scheme (UK ETS) to shipping from 1 July 2026, covering emissions from domestic voyages and in-port activities, including time at UK berths. The two schemes are not linked, so a voyage between a UK and an EU port can attract obligations under both. Many charter-party wordings were drafted with the EU scheme alone in mind. Emission control areas continue to expand in parallel, on a different logic but against the same voyage budget.
So, an owner making an investment decision is asked to choose a fuel pathway, and therefore a vessel design with an assumed thirty-year life, while the price of getting it wrong is uncertain and the rules that will set that price are still being negotiated. This is not a compliance inconvenience. It is a financial exposure of real consequence, and the long life of a deep-sea ship means a wrong call cannot easily be unwound.
When compliance becomes a balance-sheet question
Emissions reporting was once primarily an exercise in collecting and disclosing data. Today, that same data underpins allowance purchases, penalty exposure and other monetary transactions, turning reporting accuracy into a direct financial concern.
It helps to treat decarbonisation regulation less as a reporting exercise and more as exposure to be managed across three fronts at once.
The first is revenue and asset value. A vessel’s Carbon Intensity Indicator (CII) rating and broader emissions profile increasingly affect chartering attractiveness, second-hand value and financing conversations. To be clear about the mechanism: CII carries no direct financial penalty. Its consequences are entirely commercial: charterer vetting, sale and purchase, and lender behaviour under the Poseidon Principles. The yardstick itself is under review, and its treatment of idle time and ballast legs flatters some trades and penalises others. A weaker-performing ship may still trade, but with less earning power.
The second is operating cost. Overlapping carbon pricing systems add cost and penalty exposure that is real, volatile, and has to be forecast, hedged where possible and allocated correctly between owner and charterer. Workable standard wording exists: BIMCO’s ETS – Emission Trading Scheme Allowances Clause for Time Charter Parties 2022, its FuelEU Maritime Clause for Time Charter Parties 2024, and the companion clause for SHIPMAN management agreements.
The third is future compliance risk. A vessel ordered to meet today’s assumptions may become commercially disadvantaged under tomorrow’s framework well before the end of its design life. The most effective decisions today are often not the most definitive ones but the most adaptable: fuel-ready and dual-fuel designs, credible retrofit pathways, verified emissions data, and a clear view of cost exposure across several plausible outcomes rather than one hopeful forecast. In an unsettled framework, flexibility is itself a form of insurance.
The real question: who actually holds the obligation?
Under the EU ETS, the registered owner is the responsible “Shipping Company” by default. The owner holds the Maritime Operator Holding Account and surrenders the allowances. Responsibility passes to the ISM manager only where the owner formally mandates it and that documented agreement is filed with the administering authority. In the absence of that document, the obligation stays with the owner, irrespective of who is doing the reporting in practice, and irrespective of any charter-party agreement that the charterer will pay. A commercial agreement to bear the cost is not a transfer of the legal obligation.
FuelEU Maritime works differently, and this is where owners and managers alike are caught out. There is no equivalent mechanism to move the obligation to the registered owner: the responsible company is the ISM Document of Compliance holder, and it is the DOC holder that the competent authority penalises. Unlike the EU ETS, FuelEU confers no statutory right of reimbursement from charterers. So, on the same voyage, the obligation can sit with two different entities, only one of which has a statutory route to recover.The party bearing the FuelEU penalty is often not the party choosing the fuel. That mismatch has to be closed deliberately, in the ship management agreement and in the charter party.
For a manager, this is not an administrative matter. As DOC holder across a large managed fleet, we carry FuelEU exposure directly, which gives us a real interest in the accuracy of every figure that feeds it.
That interest is what our Sustainability and Performance Services (SAPS) team is built around. Rather than reconstructing a vessel’s position at verification, the team tracks EU ETS, UK ETS and FuelEU exposure through the year, so a developing deficit, a likely surplus or a shortfall in allowances is visible while there is still time to change fuel, speed or contract terms.
“Two identical ships can carry very different compliance costs depending on how the voyage was run, how the charter party allocates ETS and FuelEU exposure, and whether the underlying data survives a verifier line by line,” says Mrugeshkumar Balasubramanian, Commercial Manager of Maritime Services at Anglo-Eastern. He works alongside shipowners and operators every day as they navigate that uncertainty. “Those are commercial decisions taken every voyage, not once at the newbuilding stage. That is where a good manager protects an owner’s margin.”
Our approach: managing compliance in practice
At Anglo-Eastern, we integrate regulatory change into operational strategy rather than treating it as a parallel reporting task. Our SAPS team brings together seven service areas: crew training and empowerment, vessel performance monitoring, vessel inspection and optimisation, AI-enabled performance forecasting, charter-specific performance contracts, paint performance and advisory, and environmental and compliance audit services so that an owner can evaluate not only fuel consumption and performance trends, but the cost and compliance consequences attached to them.
“Environmental compliance used to mean keeping the correct documentation and paperwork,” says Mohan Narayan, Director of Environmental Compliance at Anglo-Eastern. “Now it means being able to show, voyage by voyage, that the numbers behind a charter party or an ETS surrender will hold up under scrutiny. That is what our compliance audit services are built to do.”
Behind those services sits a single team. Since 2026, Anglo-Eastern’s environmental compliance and fleet performance functions have worked as one strong SAPS team, so the people who analyse how a ship performs are the same people who report what it emitted. Working from one validated dataset, they cross-check noon reports, bunker delivery notes and flow-meter readings before anything reaches a verifier, and the team is automating alerts for vessels calling EU and UK ports, including first-time callers, so that accounts, monitoring plans and charter-party provisions are in place before the obligation starts to accrue.
“Under one regime, a bad number is a reporting error. Under multiple overlapping regimes, it is a cost that shows up in several places at once,” says Vipin Achan, Head of Sustainability and Performance Services at Anglo-Eastern. “The same fuel figure drives an ETS surrender, a FuelEU balance and a CII rating, so we validate it once, properly, and let it flow everywhere. Because performance and compliance share one dataset, an owner sees the carbon cost of a fouled hull or a voyage run too fast in the same report as the fuel cost and can act on both.”
As vessels age, performance drifts. Hulls roughen, propellers wear and machinery loses efficiency, so a ship burns a little more fuel every year to do the same job. Under CII, EU ETS and FuelEU, that drift now costs more than fuel: it raises carbon cost, increases compliance exposure and makes the vessel harder to charter. Energy saving devices give owners a way to recover that lost ground and extend a vessel’s competitive life, and that full return is what they should be judged on.
That is how SAPS evaluates them. In addition to the core service areas, hull coatings, propeller treatments and energy saving devices are assessed on measured before-and-after performance, corrected for speed, draught and weather, and the result is expressed in fuel, carbon cost and CII terms, so an owner can see the whole return on an intervention rather than the fuel saving alone. Not every gain needs a retrofit, though. Much of the lost ground is recovered in how the ship is run, voyage by voyage, and that is where the monitoring side of SAPS adds most value.
The value usually shows up in ordinary decisions rather than dramatic ones. On one recent North Atlantic passage, monitoring and weather routing identified a track north of the UK working the Gulf Stream in place of the original English Channel routing, saving 25.6 MT of fuel on a single voyage. Savings like this are where SAPS’s performance and compliance work meet: fuel not burned is also emissions that never enter an ETS surrender, a FuelEU balance or a CII rating.
Between 2023 and 2025, our systems monitored over 800 vessels across nearly 46,000 voyages and trained over 4,300 crew members in vessel optimisation, delivering reductions of more than 700,000 MT in CO₂ emissions and over 225,000 MT in fuel consumption; approximately USD 135 million at average VLSFO pricing across the period, before any avoided carbon cost.
Through our client portal, my.angloeastern, owners access near-real-time operational, technical, crewing and commercial data in a single environment. That matters because regulatory exposure is now shaped directly by voyage decisions, charter terms and the quality of the underlying data.
Four questions worth asking this quarter
- Do you know, per vessel, what your 2026 EU ETS, UK ETS and FuelEU exposure will be at year end, not what it was last year?
- Does your charter party allocate ETS cost, FuelEU cost and FuelEU surplus, and does it address UK scope?
- Would your noon reports, bunker delivery notes and flow meter data survive a verifier working through them line by line?
- If the global mechanism lands differently from your assumption, what does that cost you, and what would you have to change?
These are the questions SAPS is set up to answer for owners, vessel by vessel, rather than fleet-wide after the year has closed.
Decarbonisation is now a commercial condition of trading, whatever one’s view of the policy. The honest message to owners is this: the rules you must ultimately comply with are not yet fully written, the cost of error is significant and long-lived, and the discipline that protects you is data, optionality and a partner who reads the regulatory weather for a living. Build trust in your numbers first. The fuel decision follows from there.
If you are interested in learning more about our services and offerings, including SAPS, ship management, crew management, newbuilding services, and innovative projects onboard our managed fleet, please contact us.
