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I. Introduction

The EU has a dual-pronged strategy to decarbonise hard-to-abate transport sectors. In this article we focus on aviation and shipping, comparing the two regimes.  Both underlying regulations — ReFuelEU Aviation[1] and FuelEU Maritime[2] — form part of the EU’s Fit for 55 package and target fossil fuel dependency with a goal of achieving net zero in both industries by 2050.  This comparison of the two approaches highlights the divergent mechanisms, reflecting different regulatory philosophies, fuel landscapes and market realities.

II. Overview of Each Regulation

A. ReFuelEU Aviation

For aviation, ReFuelEU Aviation entered into force from 1 January 2024 and applies at EU airports, incorporating international flights departing the EU. The principal obligations have applied from 2025 and mandate that fuel suppliers ensure sustainable aviation fuel (SAF) is blended into the fuel supplied for use by aircraft at airports, rising from 2% in 2025 to 70% by 2050.  The regulation also includes sub-mandates for synthetic fuels (e-fuels / PtL), rising from 1.2% in 2030 to 35% by 2050[3]. 

ReFuelEU Aviation does not sit alone as part of the strategy to reach net zero. Within the EU, the EU Emissions Trading System (EU ETS) applies a carbon pricing mechanism to intra-EU flights, incentivising fuel efficiency and encouraging SAF-adoption, whilst the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) applies to flights leaving the EU.  CORSIA is a market-based measure requiring offsets for emissions above a 2019 baseline, with the Phase 2 (2027-2035) requiring mandatory participation for most International Civil Aviation Organization states from 2027. There is interaction with RefuelEU Aviation, as SAF used under ReFuelEU Aviation that is also CORSIA-eligible[4] can generate a credit that reduces an airline’s CORSIA offsetting obligations. 

B. FuelEU Maritime

For shipping, FuelEU Maritime was fully applied from 1 January 2025 after the monitoring, reporting and verification phase came into force in 31 August 2024. The first FuelEU Maritime report submission to a verifier was due on 31 January 2026 in relation to the previous year.  FuelEU Maritime sets maximum limits for the yearly average greenhouse gas (GHG) intensity of the energy used by ships above 5,000 gross tonnage calling at EU ports, regardless of their flag.  The GHG intensity targets apply to 100% of energy used on trips and port calls within the EU, and 50% of energy used on voyages into or out of the EU.The goal is for the GHG intensity of fuels to gradually decrease from its 2020 reference baseline[5], starting with a 2% decrease by 2025 and reaching up to an 80% reduction by 2050.  FuelEU Maritime also aims to reduce air pollution in ports by mandating that passenger and container ships at berth or moored at the quayside must use on-shore power supply (OPS) or alternative zero-emission technologies from 2030 in certain ports and from 2035 in all EU ports that develop OPS capacity.  FuelEU Maritime supplements the EU ETS, CII and EEXI ratings[6] and the International Maritime Organization (IMO) efforts to approve measures to reduce shipping’s GHG emissions at a global level through the approval of the Net-Zero Framework (NZF)[7].

III. Key Structural Differences

A. Regulatory Target and Obligation Holder

ReFuelEU Aviation: the regulation sets a supply-side mandate with the blending mandate falling on fuel suppliers at EU airports whereas FuelEU Maritime has a demand-side intensity reduction obligation, with implications for who bears compliance risk and cost — fuel suppliers for aviation and operators for shipping. Given the limited number of locations — airports and aerodromes — that aircraft operate to and from, and the limited number of suppliers of jet fuel, it’s far easier for ReFuelEU Aviation to target suppliers — who are actually conducting the blending with jet fuel — when compared with the variety of locations and fuel types that can be utilised to lower emissions intensity in the maritime sector.

The decision to set the mandate with suppliers has not caused operators to avoid any engagement with the transition to SAF-blended fuels with many of the key airline groups signing offtake agreements with suppliers[8], which helps ensure certainty of supply.

FuelEU Maritime: vessel operators, rather than owners, are usually responsible for supplying fuel and need to consider vessel specific features, trading area and the diverse properties of different fuel types as they transition to less GHG-intense sources of energy for propulsion. Charterers will often operate multiple vessels and commonly employ pooling mechanisms so they’re the ultimate decision makers on the amount and type of fuel to be purchased. This mix of vessels and differing pathways to lower intensity of operations partly explains why operator-level regulation makes more sense for FuelEU Maritime.

Whilst under EU ETS, the entity responsible for compliance can be either the shipowner or the International Safety Management Code (ISM Company), and the parties can choose who is the most appropriate entity to take on the responsibility for compliance. Under FuelEU Maritime, the entity responsible for ensuring compliance is the ISM Company, which can either be the shipowner, or any other entity organisation and person, distinct from the shipowner. Owners will often delegate the responsibility to a technical manager.

B. Fuel Scope and Eligible Pathways

ReFuelEU Aviation: the regulatory framework establishes a limited definition of SAF that is acceptable for the mandates, defined by reference to Renewable Energy Directives II[9] and III[10], that are required to achieve a minimum of 10% lifecycle GHG reductions when compared to fossil jet fuel, with a strong emphasis on advanced biofuels[11] and e-fuels[12]. 

With this tight application of criteria for acceptance under the regulation, no credit is given for lower-emitting forms of fossil jet fuel (though there would be corresponding benefits for the lower emissions as a result of the reduced liability to EU ETS and CORSIA (as applicable)), a far more prescribed approach than for shipping, which allows use of a greater array of potential fuel sources. 

FuelEU Maritime: the regulation does not mandate but incentivises the uptake of a wider range of lower GHG intensity fuels such as sustainable biofuels, renewable fuels of non-biological origin (e.g., methanol), recycled carbon fuels, Liquified Natural Gas (LNG) / Liquified Petroleum Gas (LPG), shore power or wind-assisted propulsion.  In the early periods of the regulation’s application, LNG/LPG will likely be sufficient to achieve the majority of the required reductions, but the adoption of sustainable biofuels, and other less emissions-intense forms of propulsion, will be increasingly important as the limits on emissions become more stringent.

Consideration will also need to be given by operators to the type of energy used when connected while moored. From 2030, container ships and passenger ships of above 5,000 gross tonnage[13] are required to connect to an OPS for all electrical power demand when at berth for more than two hours at certain European Economic Area (EEA) ports[14], extending from 2035 to all EEA ports equipped with OPS facilities (though there’s currently no mandate to include OPS facilities at all ports within the EEA)[15]. 

The electricity supplied from shore will be included in the calculation of the annual GHG intensity at an emission factor of 0g CO2e/MJ, lowering the vessel’s average GHG intensity significantly for the period it’s connected to OPS (even if the supplied electricity is actually sourced with higher emission factors) — incentivising electrification and the use of OPS.

C. Lifecycle Accounting Methodology

ReFuelEU Aviation: with multiple regulatory regimes applying to emissions from aircraft, there’s a mix of methodologies applicable to how lifecycle GHG emissions are calculated for each of ReFuelEU Aviation (via RED III), EU ETS and CORSIA.

For ReFuelEU Aviation, the SAF sustainability criteria under RED III is measured from well-to-wake[16], whereas EU ETS counts tank-to-wake emissions[17].  Additionally, CORSIA allows operators to use either the ICAO Default Life Cycle Emission Values[18] or Actual Life Cycle Emissions Values[19] in calculating lifecycle GHG emissions.  With this mix of applicable requirements, there is an anecdotal preference for CORSIA-eligible fuels (CEF) as SAF, covering the maximum regulatory compliance within the envelope of ICAO’s Sustainability Certification Schemes (SCS)[20]. 

FuelEU Maritime: in addition to emissions from the use on board the vessel, the GHG emissions are calculated on a well-to-wake basis. The regulation defines default well-to-tank and tank-to-wake emission conversion factors for various fuel types, production pathways and onboard energy converters.  

EU ETS, on the other hand, applies a tank-to-wake emissions methodology to maritime fuels. The emissions calculation methodologies vary between EU ETS, FuelEU Maritime and IMO NZF (albeit significant uncertainties remain within the guidelines of the latter framework).  The lack of harmonisation may be indicative of the various pathways to reducing GHG intensity available in shipping and understanding any overlap between the frameworks is critical in order to be able to make informed decisions while avoiding costly errors.  

D. Flexibility Mechanisms

ReFuelEU Aviation: the regulation is arguably an inflexible instrument, providing little of the flexibility that operators benefit from under FuelEU Maritime, which permits pooling, banking and borrowing of surplus emissions compliance units. 

There is, however, a degree of portfolio flexibility, as operators may take on more SAF than required at airports with greater availability to compensate for airports with less access to SAF[21], and flexibility within a reporting year, given the calendar basis of compliance reporting[22].

FuelEU Maritime: the regulation introduces a pooling mechanism to reflect a more flexible approach to compliance and enables pooling positive and negative compliance balances if a vessel is chartered for an entire reporting period.  The regulation also provides a mechanism for rolling over any surplus emissions from one year to the next for the same vessel and permits borrowing from future surpluses (if there is an expectation that the future GHG intensity will be improved).

This balance mechanism reflects shipping’s mix of vessel types and voyage patterns, including the practical realities of charterers who charter multiple vessels with fleets made up of newer vessels (which are generally easier to transition to cleaner fuels) and older vessels (which generally find it harder).

E. Penalty Structures

ReFuelEU Aviation: the fines for non-complying fuel suppliers are potentially significant, a function of the significantly higher prices that SAF attracts when compared with fossil jet fuel[23], with suppliers due to pay a penalty equal to at least twice the difference[24] between the cost of the relevant amount of SAF (or e-fuel) and the cost of the equivalent amount of fossil jet fuel[25].  Additionally, the supplier must make up the shortfall in one reporting period by providing an equivalent additional amount in the next reporting period[26]. 

In this way, every excess tonne of fossil jet fuel uplifted counts against the mandate from the current reporting period, increasing the penalty that needs to be paid, as well as challenging supply for the next year, as both the escalating annual mandate must be met, and the shortfall volume of SAF from the prior year produced and uplifted.

FuelEU Maritime: penalties are imposed on ship operators that exhibit a compliance deficit for GHG intensity of the energy used onboard. The penalty is levied on the reporting entity and it is calculated in accordance with a formula set out in the regulation[27]. If a vessel is not compliant for two consecutive years, there are increased penalties, adjusted based on the duration of consecutive non-compliance[28]. If a shipping company fails to comply with the penalties, the relevant vessel may face expulsion from ports, flag detentions and potentially restricted access to ports in multiple Member States[VP1] [29].

IV. Fuel Availability and Market Readiness

ReFuelEU Aviation: theSAF industry is nascent but scaling, though perhaps not as fast as operators might like[30].  With a cost premium of three to five times over fossil jet fuel, for HEFA[31]-based stocks (and more for other stocks and e-fuels), there’s a need for industry to increase availability and try to address cost and feedstock concerns (both with regard to overall available supply and geopolitical matters arising from supply chains).

Both regulations use mandates to stimulate demand as well as supply[32] with the resultant regulatory potential for ReFuelEU Aviation and FuelEU Maritime to compete for the same feed stock inputs (particularly green hydrogen and biomass) — this could advantage both transportation modes by stimulating broader increases in supply, but care must be taken to ensure that materials are appropriately allocated, especially given aviation’s need for particularly energy-dense fuel, whilst shipping has several paths to more sustainable operations.

FuelEU Maritime: shipping benefits from a broader availability of fuels as less energy density is required for operations, with shipowners expecting to use LNG as a bridge fuel to be able to initially comply with the regulation. Additionally, methanol is gaining traction as a fuel source, as evidenced by owners such as Maersk investing in a large fleet of dual-fuel methanol vessels[33].

Development of ammonia and green hydrogen as more sustainable fuels are at an even earlier stage, and it is not currently clear whether there will be sufficient renewable methane available for the shipping sector to avoid a potential lock-in for fossil fuel LNG for parts of the sector associated with high sunk costs of incorporation LNG/renewable methane-compatible engines[34].

V. Interaction with EU ETS

ReFuelEU Aviation: aviation has been in EU ETS since 2012, with ex-EU flights excluded due to the “stop-the-clock” mechanism and implementation of CORSIA[35], and the “no worse off” principle operating to ensure airlines aren’t penalised twice for the same carbon emissions under EU ETS and CORSIA – with the use of CEF in compliance with ReFuelEU Aviation mandates, operators can also reduce some of their regulatory compliance burden under EU ETS and CORSIA, as a result of the recognised lower lifecycle emissions from operations requiring fewer EU ETS allowances to be surrendered or CORSIA-eligible emissions units to be retired, as applicable. 

When shipping entered EU ETS in 2024, there was concern that ships would avoid EU ports to evade the costs, leading to increased emissions and job losses in European hubs[36]— less of a risk for aviation, because of point-to-point travel, where the risk of fuel tankering is addressed by the requirement for 90% of annual fuel[37] to be uplifted at EU airports for all commercial flights from EU airports or penalties of at least twice the price difference of the non-tanked fuel applied[38].

FuelEU Maritime: EU ETS and FuelEU Maritime operate in parallel and complement each other but have distinct purposes. FuelEU Maritime incentivises the maritime sector towards cleaner, sustainable fuels and aims at a broad impact on all GHGs, while EU ETS is a cap-and-trade system[39]. To address the risk of encouraging evasive behaviour, the regulation specifically excludes stops of containerships in a neighbouring container transshipment ports from the definition of “port of call”. The regulation sets out criteria for neighbouring container transshipment ports[40] and all ports meeting these criteria are identified in the Implementing regulation[41] (currently, only two: East Port Said, Egypt and Tangier Med, Morocco)[42]. Any container ships stopping in a transshipment port must report 50% of the energy used for the voyage to that port (rather than only the shorter leg from the transshipment port to the EU/EEA port).  

VI. Strategic and Commercial Implications

RefuelEU Aviation: the regulation has had a limited effect in re-shaping aviation finance to integrate SAF offtake agreements[43] or SAF financing structures into mainstream lending and leasing practices, though there is certainly scope for sustainability-linked loans to have key performance indicators linked to investments in SAF (even if the loan itself is not applied to SAF investments).

From an investor or lender perspective, adoption of SAF, as primarily a drop-in fuel, may mean there is less concern towards stranded asset risk for aviation absent a shift to completely transformative technological solutions, and represents an opportunity to participate in green finance frameworks for SAF-production or aircraft operating on fuels with far higher reductions in lifecycle GHG emissions.

FuelEU Maritime: the new regulatory framework has put increasing pressure on owners, managers and charterers to find ways to navigate an increasingly complex system.  Key stakeholders are exploring how to carefully manage compliance, while also exploring opportunities for competitive advantages. There are numerous practical implications (transshipments, ballast hauls, delegation of responsibilities) but owners and operators can focus on finding the right tools to monitor the emissions performance of their vessels on a continuous basis and to eventually find ways to become more competitive through the dynamic pricing of emissions trading and investment in cleaner fuel.

In practice, lenders have been requesting sustainability-linked covenants related to CII scores, EEXI scores and compliance with EU ETS and FuelEU Maritime, and have been treating the new regulations as a source of both risk for financial penalties against their borrowers while also looking for opportunities to incentivise owners who are willing to invest in cleaner technologies.

VII. Conclusion

Both regulations signal the EU’s commitment to sector-specific decarbonisation but via notably different architectures, with aviation relying on supply mandates and fuel certification and shipping on operator-level GHG intensity targets with flexible compliance tools.  Aviation had something of a head start but it is an open question if the divergent approaches produce equivalent ambition — or will one sector outpace the other? Shipping, as a later adopter, can learn from aviation how operators who are quick to adopt new compliance strategies can benefit in the long term but this requires ongoing dialogue between industries.  Nevertheless, both industries face the same challenge — the energy transition pace required to comply with the regulations does not currently match the pace of establishing a widely available distribution chain of renewable fuels.

[1] Regulation (EU) 2023/2405 of the European Parliament and of the Council of 18 October 2023 on ensuring a level playing field for sustainable air transport.

[2] Regulation (EU) 2023/1805 of the European Parliament and of the Council of 13 September 2023 on the use of renewable and low-carbon fuels in maritime transport.

[3] Though not the focus of this article, it appears that the 2025 mandate has been met — though official reporting is awaited — but there are real concerns in the industry that the synthetic fuels sub-mandates are not achievable: https://www.iata.org/en/pressroom/2025-releases/2025-12-09-04/#:~:text=Mandates%20in%20the%20EU%20and,review%20their%20own%20SAF%20targets.

[4] For more information on CORSIA Eligible Fuels see: https://www.icao.int/CORSIA/corsia-eligible-fuels.

[5] Being 91.16 grams of CO2 equivalent per Megajoule (gCO2e/MJ) (FuelEU Maritime, Article 4(2)).

[6] EEXI (Energy Efficiency Existing Ship Index) and CII (Carbon Intensity Indicator) are mandatory International Maritime Organization (IMO) regulations effective from January 1, 2023, aimed at reducing maritime greenhouse gas emissions.

[7] See a prior article on the postponement adoption of the NZF by the IMO by D. Mehlman and N. Antoniou: https://www.vedder.com/insights-events/imo-net-zero-factsheet-and-update/.  

[9] Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (recast) (“RED II”).

[10] Directive (EU) 2023/2413 of the European Parliament and of the Council of 18 October 2023 amending Directive (EU) 2018/2001, Regulation (EU) 2018/1999 and Directive 98/70/EC as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652 (“RED III”).

[11] From agricultural residues, municipal waste and algae, amongst other sources (Part A of Annex IX of RED II), and which attracts a multiplier of twice their energy content for RED purposes for the applicable member state of the European Union (“Member State”) (noting this multiplier is of no application for EU ETS or CORSIA purposes).

[12] Attracting only a 1.5 times energy content benefit, but a necessity to fill the e-fuel sub-mandates noted before.  Due to their higher lifecycle GHG savings than HEFA-derived SAF or Advanced SAF, assuming production is from green hydrogen and appropriate sustainably sourced CO2, there are additional benefits due to the maximum reductions available for EU ETS / CORSIA costs.

[13] Bulk carriers, tankers and smaller vessels are currently excluded, as are vessels already using alternative zero-emission technologies. 

[15] The Alternative Fuels Infrastructure Regulation (“AFIR”) obliges the TEN-T ports to install OPS infrastructure in accordance with the timeline specified in the AFIR.

[16] Being the GHG emissions from extraction through to combustion.

[17] Being the GHG emissions from combustion, without including the well-to-tank emissions (being the emissions from extraction through to the point of creation of the fuel).

[20] See: https://www.icao.int/sites/default/files/environmental-protection/CORSIA/Documents/CORSIA%20Eligible%20Fuels/ICAO-document-04-Approved-SCSs-October-2024.pdf.  The schemes help ensure the lifecycle GHG emissions reductions for SAF have been measured in accordance with the methodologies set out above.  Given their UN-level approval, adoption of SCS-approved CEF could represent the best defence to any claims of greenwashing (noting CORSIA is a compliance regime, mandatory for those participating in it).

[21] Airports in five Member States (France, Germany, The Netherlands, Spain and Sweden) accounted for 99% of supply within the EU in 2024: https://www.easa.europa.eu/en/newsroom-and-events/press-releases/easa-publishes-report-sustainable-aviation-fuel-scale-progress#:~:text=Key%20findings,how%20concentrated%20the%20market%20remains.

[22] It is beyond the scope of this article to consider industry demands for book-and-claim systems, and the issuance of SAF certificates, to help with balancing of supply and between suppliers and airlines with no direct access to physical SAF.  See, e.g.: https://a4e.eu/wp-content/uploads/A4E-ERA-Memo-SAF-Flexibility-Mechanism-and-Book-Claim.pdf.

[23] EASA published average prices in 2024 for SAF from biofuels, advanced biofuels and recycled carbon biofuels at €2,085/t, and a reference price for e-fuels estimated at €7,695/t, with fossil jet fuel at €734/t.  See: https://www.easa.europa.eu/en/downloads/142606/en.

[24] ReFuelEU Aviation, Articles 12(4) and (5).

[25] It’s been reported that Member States may impose fines well above this level, with Germany having considered a penalty of €17,000 per tonne.  See: https://bioenergytimes.com/germany-proposes-e17000-tonne-penalty-for-missing-e-saf-targets-under-eu-aviation-fuel-rules/#:~:text=The%20blending%20requirement%20will%20increase,decisions%20and%20scale%20up%20production.

[26] ReFuelEU Aviation, Articles 12(7) and (8).

[27] FuelEU Maritime, Article 23(2) and Annex IV.

[28] Ibid.

[29] FuelEU Maritime, Articles 23(6) and 25(3).

[31] Hydroprocessed Esters and Fatty Acids — in 2024, 81% of the EU’s SAF came from used cooking oil, with a further 17% from waste animal fats.  The majority of this, 69%, originated from outside the EU, mostly from China (38%) and Malaysia (12%) supplying the bulk.  See: https://www.easa.europa.eu/en/downloads/142606/en.

[37] ReFuelEU Aviation, Article 5(1).

[38] ReFuelEU Aviation, Article 12(2).

[39] Capping the total amount of emissions permitted within the system in any period by distributing a fixed number of emissions allowances, and allowing polluters to trade those allowances.

[40] FuelEU Maritime, Article 2(2).

[41] Implementing Regulation (EU) 2023/2297.

[42] The list of transshipment ports will continue to be reviewed by the European Commission.

[43] Agreements to purchase a certain volume of SAF from project.

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