FuelEU Considerations for Time Charters With thanks to Antonia Panayides (Partner) of Reed Smith Articles Reed Smith Published: May 19, 2025 Contact author Download article pdf With FuelEU 1 having come into force on 1 January 2025, there have been lots of questions raised as to the allocation of responsibilities between shipowners and charterers.  We are currently in the first Reporting Period of the new regime (1 January 2025 to 31 December 2025). During the Reporting Period, the greenhouse gas emissions of a vessel should be tracked and monitored. Verification of the 2025 data will then take place in the 2026 calendar year, the “Verification Period,” after which compliant vessels will receive a FuelEU Document of Compliance.  Unlike EU ETS, where a “shipping company” purchases and surrenders EU Allowances (EUAs) for each tonne of CO2 emitted, FuelEU sets a target for fuel emission intensity which the “company” must seek to meet. Each fuel is given an emission profile reflecting the environmental impact of the fuel on a ‘well-to-wake’ basis – that is, from the point it is extracted from the ground or otherwise captured to when it is burnt onboard the vessel. The Regulation rewards and incentivises the use of renewable or low-carbon fuels.  Who is the “company” under FuelEU? FuelEU makes the “company” 2 responsible for ensuring the vessel is compliant. In practice, that commonly means whoever is the vessel’s Document of Compliance holder will be responsible for ensuring compliance under the Regulation.  In line with the “polluter pays” principle, the “company” may seek to pass responsibility for compliance to its contractual counterparts. In doing so, a counterpart would want to ensure that they are able to utilise the different methods of achieving compliance beyond paying the FuelEU penalty (namely, the ability to use bio- and low carbon fuels, or the ability to pool, bank or borrow). Parties should therefore consider their charterparty clause