FuelEU Compliance Balance: Banking, Borrowing, Pooling

The FuelEU compliance balance is the quantity, in grams of CO2 equivalent, by which a ship’s well-to-wake GHG intensity beats or misses the annual limit of FuelEU Maritime , Regulation (EU) 2023/1805, multiplied by the energy the ship used in scope. Annex IV Part A sets the formula and the verifier calculates it under Article 16(4). A positive balance is a compliance surplus; a negative one is a compliance deficit (Article 3).

A deficit has three routes other than the penalty. Article 20 lets a ship bank a surplus into the next year or borrow a limited advance from it, and Article 21 lets two or more ships pool their balances. Whatever remains negative on 1 June of the verification period is converted into a penalty of EUR 2,400 per tonne of VLSFO-equivalent energy under Article 23(2) and Annex IV Part B.

The Regulation entered into force on 12 October 2023 and applies from 1 January 2025 (Article 32), so 2025 is the first reporting period and 2026 the first verification period.

Energy in scope under Article 2(1)

The balance counts only energy inside the Regulation’s scope. Article 2(1) applies to “all ships of above 5 000 gross tonnage that serve the purpose of transporting passengers or cargo for commercial purposes, regardless of their flag”. The IMO draft uses a different threshold, “5,000 gross tonnage and above” (draft MARPOL Annex VI regulation 30.1), so a ship of exactly 5,000 GT would be inside the IMO text and outside FuelEU.

For those ships Article 2(1) counts:

The 50 percent rule applies in both directions. A bulk carrier running Port Hedland to Rotterdam and back counts half the energy on each leg. Electricity taken from an onshore power supply enters the energy term as well: Annex IV Part A sums the mass of each fuel times its lower calorific value, plus the electricity delivered to the ship.

Exclusions and temporary exemptions

Article 2(7) takes whole classes out: “This Regulation does not apply to warships, naval auxiliaries, fish-catching or fish-processing ships, wooden ships of a primitive build, ships not propelled by mechanical means, or ships owned or operated by a government and used only for non-commercial purposes.”

Four Member State exemptions reduce the energy counted, and all four end on 31 December 2029:

Each exemption has to be notified to the Commission before it takes effect and is published in the Official Journal. An owner cannot claim one; only the Member State can grant it.

Article 2(2) deals with evasion by transhipment. The Commission lists “neighbouring container transhipment ports” outside the Union, less than 300 nautical miles from a Member State port, where transhipment exceeds 65 percent of container traffic, by 31 December 2025 and every two years after. The list is the Commission’s to make; an owner cannot designate a port.

The compliance balance under Annex IV Part A

Annex IV Part A defines the balance as:

The target is the Article 4(2) limit for the year: the 2020 reference value of 91.16 gCO2eq/MJ reduced by 2 percent from 2025, 6 percent from 2030, 14.5 percent from 2035, 31 percent from 2040, 62 percent from 2045 and 80 percent from 2050. That gives 89.34 gCO2eq/MJ for 2025 to 2029, 85.69 for 2030 to 2034 and 77.94 for 2035 to 2039 (site arithmetic). The actual intensity comes from the Annex I methodology, with default factors in Annex II unless certified values apply under Article 10; the FuelEU intensity formula article covers that calculation, and the RFNBO multiplier of Article 5 enters it.

The sign convention is target minus actual. A ship at 84.0 gCO2eq/MJ against a limit of 89.34 has a positive balance, a surplus; a ship at 91.7 has a negative balance, a deficit. The unit is gCO2eq, not tonnes of fuel: a balance of 2.1 x 10^9 gCO2eq is 2,100 tonnes CO2eq.

Wind reward factor

Annex I lets a ship with wind-assisted propulsion multiply its GHG intensity by a reward factor below 1. The OJ table gives three points, pairing the ratio of available effective wind power to propulsion power (PWind/PProp) with the factor fwind: 0.05 gives 0.99, 0.1 gives 0.97, and 0.15 or more gives 0.95. PWind is calculated under MEPC.1/Circ.896 and PProp is main engine power as defined for the attained EEDI. The text gives no rule for ratios between or below the listed points. A ship at 91.0 gCO2eq/MJ with a ratio of 0.15 or more is scored at 86.45, which turns a deficit against the 2025 to 2029 limit of 89.34 into a surplus (site arithmetic).

The RFNBO multiplier and the 2034 subtarget

Article 5(1) lets a ship count renewable fuels of non-biological origin (RFNBO, such as e-methanol or e-ammonia) with a multiplier of 2 from 1 January 2025 to 31 December 2033 in its intensity calculation. The Commission publishes the fleet’s RFNBO share “at the latest 18 months after the end of each reporting period” (Article 5(2)).

If that share is below 1 percent for the 2031 reporting period, a subtarget of 2 percent RFNBO in each ship’s yearly energy applies from 1 January 2034 (Article 5(3)). It does not apply if monitoring before 1 January 2033 shows a share above 2 percent (Article 5(4)), or if there is “evidence of insufficient production capacity and availability of RFNBO to the maritime sector, uneven geographical distribution or a too high price of those fuels” (Article 5(5)). Energy from shore power is outside the article (Article 5(10)).

The subtarget has its own balance and penalty. Annex IV Part A(b) sets the RFNBO balance in MJ as 2 percent of the ship’s fuel energy minus its RFNBO energy, so a positive figure is a shortfall, the opposite sign to the GHG balance. The penalty under Article 23(1) and Annex IV Part B(b) is that shortfall divided by 41,000 and multiplied by Pd, the price difference between RFNBO and fossil fuel, to be set by implementing act. Article 21(1) allows a separate pool for the subtarget. The RFNBO multiplier and EU RFNBO rules articles cover the fuel definitions.

Who calculates and when

The company sends the verifier its FuelEU report by 31 January of the verification period (Article 15(3)). By 31 March the verifier notifies the company of the calculated balance and records it in the FuelEU database (Article 16(5)). Before 1 May the verifier records the verified balances “after possible application of Articles 20 and 21” (Article 23(1)), which is the figure the penalty is calculated on.

Ice-class adjustment

Annex IV Part A lets a ship of ice class IC, IB, IA or IA Super exclude the additional energy used when navigating in ice conditions until 31 December 2034, and lets IA and IA Super ships use the adjusted fuel mass of Annex V for their technical characteristics. The ice class notations article covers the Finnish-Swedish classes the Regulation refers to.

Banking a surplus under Article 20(1)

A ship with a surplus can carry it forward. Article 20(1) lets the company bank the surplus “to the same ship’s compliance balance for the following reporting period”, subject to approval by its verifier, and the banking has to be done before the FuelEU document of compliance is issued.

Three limits follow from the text:

• Same ship. A banked surplus stays with the hull. Moving surplus to another ship is possible only through a pool under Article 21.
• Next period. The text banks to the following reporting period. It does not state a multi-year horizon. On this site’s reading, a surplus that reappears in next year’s balance can in turn be banked if that balance is positive, which is how a surplus can be carried more than one year.
• Before the document of compliance. Article 20(1) sets no calendar date; on this site’s reading the banking must be in the balances recorded before 1 May (Article 23(1)).

The text applies no discount. A tonne CO2eq banked is a tonne CO2eq in the next balance.

Borrowing under Article 20(2)

A ship in deficit can borrow against the next year. Article 20(2) allows an “advance compliance surplus” which, multiplied by 1.1, is deducted from the ship’s balance in the following reporting period. Two conditions apply:

• Cap. The advance cannot be “for an amount exceeding by more than 2 % the limit set out in Article 4(2), multiplied by the energy consumption of the ship calculated in accordance with Annex I” (Article 20(2)(a)). On this site’s reading, the cap is 2 percent x the year’s limit x the ship’s in-scope energy for the year of borrowing.
• No consecutive borrowing. A ship cannot borrow for two consecutive reporting periods (Article 20(2)(b)).

The borrowing is recorded in the FuelEU database by 30 April of the verification period (Article 20(3)). If the ship makes no port call under a Member State’s jurisdiction in the following period, Article 20(4) requires the company to pay the penalty it initially avoided, multiplied by 1.1, notified by 1 June.

For a ship using 5 x 10^8 MJ in scope in 2026, the cap is 0.02 x 89.3368 x 5 x 10^8 = 0.893 x 10^9 gCO2eq, about 893 tonnes CO2eq, which becomes a deduction of 0.983 x 10^9 gCO2eq from its 2027 balance (site arithmetic).

Pooling under Article 21

Pooling lets surplus on one ship settle deficit on another. Article 21(1) allows the compliance balances of two or more ships, calculated under Article 16(4), to be pooled for verification. A ship may be in one pool per reporting period, with the option of two separate pools, one for the GHG intensity target and one for the RFNBO subtarget.

Validity conditions in Article 21(4)

Article 21(4) reads: “A pool is valid only if the total pooled compliance is positive, if ships which had a compliance deficit … do not have a higher compliance deficit after the allocation …, and if ships which had a compliance surplus … do not have a compliance deficit after the allocation”. Three consequences:

• A pool whose total is zero or negative is not valid. There is no residual-deficit redistribution; an invalid pool leaves each ship on its own balance.
• A surplus ship can give away surplus but cannot be pushed into deficit.
• A deficit ship can be helped but cannot be made worse off by the allocation.

Registration and recording

The company registers in the FuelEU database its intention to pool, the ships, the allocation and the verifier (Article 21(2)). A pool of ships of more than one company is valid only once all the companies concerned validate it (Article 21(3)). By 30 April of the verification period the verifier records the definitive composition of the pool and the allocation in the database (Article 21(8)).

Two exclusions apply. A ship that does not hold a valid document of compliance as required by Article 24 cannot be included in a pool (Article 21(5)). A ship in a pool cannot borrow, because Article 21(7) states that “Article 20(2) shall not apply to a ship participating in the pool”.

A surplus left with a ship after the pool allocation can be banked under Article 20(1) (Article 21(6)).

What the text leaves to contract

The Regulation says nothing about payment between pool members. Price, allocation of surplus, what happens if a member’s verified figures change, and exit terms are private arrangements. Flag is not a condition, and there is no requirement that pooled ships trade on the same routes or belong to the same group.

Choosing between banking, borrowing and pooling

The three routes differ on who can use them and when. The table sets out the text.

A deficit ship that cannot find a pool large enough to make the total positive has two choices: borrow up to the cap and pay the penalty on the rest, or pay the penalty on the whole deficit. A deficit within the borrowing cap is cleared by borrowing alone, and a ship that borrowed in the previous period cannot borrow again (Article 20(2)(b)).

The calendar compresses the decision. Verified balances are notified by 31 March of the verification period (Article 16(5)), and the definitive pool and any borrowing must be recorded by 30 April (Articles 20(3) and 21(8)). On the text, a company that waits for verified figures has about one month to finalize pool partners, agree an allocation, have every company validate a multi-company pool, and have the verifier record it. Pool terms agreed during the reporting year, on estimated balances, need a mechanism for the verified figures.

The FuelEU database under Article 19

The Commission develops and runs the database under Article 19(1), and companies, verifiers, competent authorities, national accreditation bodies, the European Maritime Safety Agency and the Commission have access to it. It carries the verified FuelEU report, the balance, banking, borrowing, the pool registration and the document of compliance. EMSA launched the FuelEU monitoring-plan functions in THETIS-MRV on 30 July 2024; the Regulation itself names only the FuelEU database.

The FuelEU penalty under Article 23(2) and Annex IV Part B

A deficit left on 1 June of the verification period becomes a penalty payable by 30 June (Article 23(2)). Annex IV Part B converts the deficit into VLSFO-equivalent tonnes and prices them:

The balance is in gCO2eq, GHGIE actual is the ship’s attained intensity in gCO2eq/MJ, 41,000 MJ is the energy in one tonne of VLSFO, and EUR 2,400 is the price per tonne. The divisor is the ship’s own attained intensity, not the limit, so the conversion differs from ship to ship.

Article 23(2) multiplies the result by 1 + (n - 1)/10, where n is the number of consecutive reporting periods for which the company is subject to a FuelEU penalty for that ship. The second consecutive year costs 1.1 times the base, the third 1.2 times.

Zero-emission at berth under Article 6

Article 6 is a separate obligation with its own penalty, and it applies only to containerships and passenger ships (Article 6(4)). From 1 January 2030 such a ship moored at the quayside in a port covered by Article 9 of Regulation (EU) 2023/1804 must connect to onshore power supply and use it for all its electrical demand at berth (Article 6(1)). From 1 January 2035 the same applies in any other Member State port where the quay has available OPS (Article 6(2)).

Article 6(5) lists eight exceptions, including stays of less than two hours, use of an approved zero-emission technology, an unscheduled call for safety or saving life, no available connection point, grid stability at risk, and an incompatible shore installation where the ship’s equipment is certified. From 1 January 2035, in Article 9 ports, the three exceptions for unavailability, grid risk and incompatibility may be used for no more than 10 percent of the ship’s port calls in the reporting period, or 10 calls, whichever is lower (Article 6(10)). The port-State competent authority records exceptions and non-compliance in the FuelEU database (Article 6(9)).

Other penalties and revenue

A ship that fails Article 6 pays EUR 1.5 per kW of established electrical power demand at berth per hour at berth in non-compliance, rounded up (Article 23(5)). The power demand comes from the SOLAS Chapter II-1 electrical load balance or, failing that, 25 percent of the maximum continuous rating of the main engines in their EIAPP certificate (Article 8(3)(e)). Penalty revenue goes to the Member States, which “shall endeavour” to use it for renewable and low-carbon maritime fuels and technologies and report by 30 June 2030 and every five years (Article 23(11)). The FuelEU penalties article covers the penalty regime in more detail.

Worked example: three ships in 2026

The example is this site’s arithmetic on the 2026 limit of 91.16 x 0.98 = 89.3368 gCO2eq/MJ. Energy figures are in-scope energy under Article 2(1).

Alone, Ship B would pay 1.182 x 10^9 / (91.7 x 41,000) x 2,400, about EUR 754,300, on 314.3 VLSFO-equivalent tonnes.

In a pool, the total is +1.354 x 10^9 gCO2eq, which is positive, so the pool can be valid under Article 21(4). An allocation of at least 1.182 x 10^9 to B clears B’s deficit, provided neither A nor C ends in deficit. A keeps 0.953 x 10^9 and C keeps 0.401 x 10^9, and each can bank what it keeps under Articles 21(6) and 20(1). B pays nothing to the Member State; what it pays A is a matter for the companies.

If Ship B were at 95.0 gCO2eq/MJ, its balance would be -2.832 x 10^9 and the pool total -0.296 x 10^9. That pool is not valid, and no smaller pool that includes B has a positive total. Ship B stands alone. It can borrow up to 0.893 x 10^9 gCO2eq, which costs a 0.983 x 10^9 deduction in 2027, and pay the penalty on the remaining 1.938 x 10^9: 1.938 x 10^9 / (95.0 x 41,000) x 2,400, about EUR 1,194,300. Without borrowing its penalty would be about EUR 1,744,800. It cannot both borrow and join a pool.

The second year after borrowing

Borrowing moves the problem forward with interest. Suppose Ship B in the second scenario borrows the full 0.893 x 10^9 gCO2eq for 2026 and in 2027 improves to 88.5 gCO2eq/MJ on the same 5 x 10^8 MJ. Its own 2027 balance is (89.3368 - 88.5) x 5 x 10^8 = +0.418 x 10^9, but the Article 20(2) deduction of 0.983 x 10^9 leaves it at -0.564 x 10^9 (site arithmetic).

It cannot borrow again, because Article 20(2)(b) bars borrowing in two consecutive reporting periods. On this site’s reading it can join a valid pool in 2027. Article 21(7) disapplies Article 20(2) for a pooled ship, and the text does not say whether that reaches a deduction carried from the previous period. If it pays instead, the base penalty is 0.564 x 10^9 / (88.5 x 41,000) x 2,400, about EUR 373,200, and because the company was subject to a penalty for that ship in 2026 as well, Article 23(2) applies n = 2 and a factor of 1.1, about EUR 410,600. A third penalized year in a row would carry a factor of 1.2.

Annual calendar

The cycle runs in the verification period, the calendar year after the reporting period (Article 3).

For the 2025 reporting period, that is 31 January 2026 to 30 June 2026.

The monitoring plan under Articles 7 to 9

Every figure in the balance traces back to a monitoring plan. Article 8(1) required companies to submit “By 31 August 2024 … to the verifiers a monitoring plan for each of their ships indicating the method chosen from among methods set out in Annex I”. A ship first coming into scope later submits no later than two months after its first call at a Member State port (Article 8(2)).

The verifier assesses the plan’s conformity with Articles 7 to 9, and non-conformities must be corrected “before the reporting period starts” (Article 11(1)). The assessed plan is recorded in the FuelEU database (Article 11(3)). The company checks the plan “regularly, and at least annually” and modifies it without undue delay on a change of company, new energy systems or OPS, a change in data availability, incorrect data or a verifier’s finding (Article 9). Monitoring data and documentation, including bunker delivery notes, are kept for at least five years (Article 7(4)), and EU MRV data under Regulation (EU) 2015/757 are used where appropriate (Article 7(5)).

Verification and verifiers under Articles 11 to 16

The balance is only as good as the verified report behind it. The verifier assesses the monitoring plan (Article 11), verifies the FuelEU report under the procedures of Article 13, and calculates the balance and any penalty under Article 16(4). The EU MRV Regulation data and the FuelEU monitoring plan feed the same annual cycle, and the EU MRV voyage data article covers the per-voyage records.

FuelEU verifiers are independent by statute. Article 12(1) states that “The verifier shall be independent from the company or from the ship operator” and that neither the verifier nor any part of its legal entity may be a company, ship operator or owner of a company. Verifiers are accredited “by a national accreditation body pursuant to Regulation (EC) No 765/2008” (Article 14(1)).

A verified figure is not final. Under Article 17 the competent authority of the administering State may carry out additional checks at any time on the two previous reporting periods and issue updated balances and penalties, payable within one month of notification. A company may apply for review of a verifier’s calculation within one month to the competent authority of the Member State where the verifier is accredited (Article 26(1)).

The FuelEU document of compliance and enforcement

The document of compliance closes the year. By 30 June of the verification period the verifier issues it where no penalty is due (Article 22(1)); where a penalty is due, the competent authority of the administering State issues it once the penalty is paid (Article 22(2)). It is valid for 18 months after the end of the reporting period, or until a new one is issued (Article 22(4)).

Article 24 requires ships to hold a valid document from 30 June of the verification period, and port state control inspections under Directive 2009/16/EC, as amended by Article 31, check it. Enforcement is for the Member States under Article 25. Where a ship has failed Article 24 for two or more consecutive reporting periods and other enforcement has failed, an expulsion order can be issued, and a ship flying a Member State flag can be detained by that State (Article 25(3)).

Charter parties, ship sales and cost recovery

The Regulation places the obligation on the company, meaning the shipowner or the organization that has taken over operation of the ship and the duties of the ISM Code (Article 3), and the company responsible on 31 December reports for the whole year (Article 15(4)(c)). Article 23(8) keeps the company liable for the penalty but allows it to seek reimbursement from a commercial operator that buys the fuel or decides the cargo, route or speed, by contract.

Under a time charter party the charterer usually controls those decisions. The BIMCO FuelEU Maritime Clause for Time Charter Parties 2024, adopted by BIMCO’s Documentary Committee on 25 November 2024, allocates the balance, the penalty and pooling rights between owner and charterer. BIMCO has also published a FuelEU clause for SHIPMAN 2024 and FuelEU and ETS clauses for memoranda of agreement, which bear on ship sale and purchase under forms such as Saleform 2025 .

A banked surplus belongs to the ship’s balance, not to the company. Who pays for it on a sale, and who bears a borrowing deduction that falls on the buyer’s first year, are points for the sale contract.

FuelEU and the EU ETS

A ship calling in the EU runs both instruments, on different bases. The EU ETS for shipping under Directive 2003/87/EC requires the shipping company to surrender allowances for reported emissions by 30 September each year, with a statutory right of reimbursement under Article 3gc (EU ETS cost pass-through ). FuelEU prices intensity, not tonnes emitted, and a FuelEU surplus has no value under the ETS. The EU ETS and FuelEU double compliance and EU ETS surrender mechanics articles cover the ETS side, including maritime operator holding accounts in the Union Registry.

FuelEU pooling and the draft IMO Net-Zero Framework

The draft IMO Net-Zero Framework (MEPC/ES.2/2, approved at MEPC 83 on 11 April 2025, not adopted) would add a global intensity regime with a different flexibility design. It has no pool. A ship below the direct compliance target would receive surplus units , which move one at a time between ship accounts in the IMO GFI Registry and can balance only another ship’s Tier 2 deficit above the base target (draft regulations 36.6 and 36.12). IMO surplus units last two calendar years after issuance; there is no borrowing.

Pending amendment: COM(2026) 620

The Commission proposal COM(2026) 620 of 17 July 2026, the FuelEU and MRV simplification proposal , would reword Articles 20(1), 20(2), 21(1) and 21(4) so that banking, borrowing and pooling rest on verification under Article 16 rather than on the calculation in Article 16(4). The 2 percent borrowing cap, the 1.1 factor and the consecutive-period rule are unchanged. The proposed Article 21(1) omits the sentence allowing two separate pools for the GHG intensity target and the RFNBO subtarget. Articles 20 and 21 have not been amended since the original text of 22 September 2023; the proposal is not law.

Common errors about FuelEU banking, borrowing and pooling

• Wrong article numbers. Banking and borrowing are Article 20, pooling Article 21, the database Article 19, the document of compliance Article 22 and the penalty Article 23(2) with Annex IV. Article 5 is the RFNBO article, and the balance formula is in Annex IV Part A.
• “A pool can be net-zero.” Article 21(4) requires the total to be positive.
• “Borrow after pooling.” A pooled ship cannot borrow (Article 21(7)).
• “Borrowing is 2 percent of next year’s allowance.” The cap is 2 percent of the Article 4(2) limit times the ship’s energy.
• “The penalty divides by the limit.” Annex IV Part B divides by the ship’s actual intensity.
• “The administering authority issues every document of compliance.” The verifier does, unless a penalty was due (Article 22).
• “Penalty revenue funds the Innovation Fund.” Article 23(11) leaves it with Member States, with a best-endeavours use clause.
• “Provisional allocations with a year-end true-up.” No such provision exists in the Regulation.

Limitations

This article states the original text of Regulation (EU) 2023/1805 as published in OJ L 234 of 22 September 2023, which is the only consolidated version. A 2023 corrigendum exists and COM(2026) 620 would change Articles 20 and 21 if adopted. Commission implementing and delegated acts on verification and the database add procedural detail not covered here.

The worked example is this site’s arithmetic on assumed intensities and energies, not a real fleet; real balances depend on certified fuel values, RFNBO accounting, ice-class adjustments and verified energy. Several readings in this article are the site’s own: the pairing of the three Annex I wind reward points, read from the OJ table; whether a ship can join a pool in the year after borrowing; the 1 May date for banking; the use of n = 2 in the second-year example, which holds only if the company is unchanged, since Article 23(2) counts periods for which “the company” is subject to a penalty for that ship; the Article 20(2)(a) cap as 2 percent of limit times the borrowing year’s energy, the multi-year carry of a banked surplus through successive positive balances, and the treatment of a total of exactly zero as an invalid pool. The Regulation sets no market price for pool surplus, so none is given.

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• FuelEU intensity formula
• FuelEU RFNBO multiplier
• FuelEU reward mechanism
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