Published in the latest edition of the European Transport Law  Review, the position paper entitled “Charting Uncertain Seas: Legal Ambiguities and Compliance Strategies in EU ETS and FuelEU Maritime Regulations” explores the legal and operational challenges introduced by the EU’s Emissions Trading System  on shipping, and the FuelEU Maritime initiative.

Against the backdrop of these significant regulatory milestones, the article was written by KBRV’s Head of Legal Affairs, Shipping Policy & Security, Elle De Soomer, and Head of Environmental & Technical Affairs, Celine Audenaerdt. It addresses the complexities of compliance responsibilities and the legal ambiguities that contribute to uncertainty and contractual risks for shipowners, operators, and charterers.

“It is vital that the shipping industry first understands the principles of the EU ETS so that they can better interpret which party should bear the compliance burden,” explains Ms De Soomer. “While the inclusion of maritime in the Emission Trading System presents a significant shift towards better accountability and environmental responsibility in the industry, our analysis finds that there are significant complexities in the definition of the responsible entity.

“One example is the stipulation that the responsible entity must be the same for EU MRV and EU ETS where this is not always the case. Another is the challenges of applying the “polluter pays” principle across EU member states where each has its unique legal framework.”

By examining standard contractual clauses aimed at mitigating these challenges, the paper also provides strategies for navigating the regulatory environment and offers recommendations to achieve compliance.

As for FuelEU Maritime, companies are currently hesitant to prepare for it due to the absence of definitive legislative texts and unclear regulatory intentions. Ms Audenaerdt states:

“There have been efforts to anticipate changes by integrating broad clauses into customer contracts, yet substantial education and discussions are needed. All of which depend on the final legislation.

“Additionally, a specific BIMCO clause is not yet available, and fuel certification rules, especially for fuels produced outside the EU, remain undefined. This uncertainty complicates industry readiness for the 2025 FuelEU implementation, challenging the notion that the industry can adapt in time without clear regulations and certification processes. The industry’s ability to make billions in investments hinges on having these elements in place.”

The path to greener maritime practices not only depends on regulatory adjustments but also on clarifying enforcement mechanisms, particularly in relation to the ‘polluter pays’ principle.

Addressing these challenges requires a concerted effort by Member States to ensure that the transition to environmentally sustainable shipping practices does not unduly burden those committed to leading the change.