The European Union (EU) has implemented a tougher than IMO emission intensity indicator requirement for shipping. Under the FuelEU Maritime regulations a penalty applies where vessels are non-compliant to set greenhouse gas emission limits. In this Policy Briefing we outline why the penalty calculation is problematic – that it introduces distortions and undermines regulation objectives.

This policy briefing argues that:

  • The current formula calculates a penalty that is weaker for higher emitters, causes unequal treatment for fleets with the same level of non-compliance balance, and complicates the pooling mechanism.
  • Proposed modification would be to replace the Actual GHG Intensity with the Target GHG Intensity in the penalty payment calculation.
  • For the UK Government, in the expected fuel standard consultation and implementation, we recommend that such distorting effects are avoided rather than harmonising with the EU.

 

Suggested citation:

Song, D., & Copeland, C. L. (2026). FuelEU Maritime: Proposed Modification for the Non-Compliance Penalty Calculation. UK National Clean Maritime Research Hub. https://doi.org/10.5281/zenodo.20141945