Shipowners and operators face growing financial, commercial and compliance risks from delaying EU allowance transfers until September, according to EmissionLink managing director Philippos Ioulianou, as shipping’s exposure under the EU Emissions Trading System continues to rise. 

Ioulianou warned that the problem was not the September deadline itself, “but the industry’s habit of waiting until the last possible moment”, adding that this “can push critical funding and compliance decisions to the brink and leave owners, managers and compliance providers carrying significant exposure”. 

According to Ioulianou, operators must also surrender EUAs covering their verified emissions before the end of September following the first FuelEU Maritime compliance cycle. 

He explained that current practices between owners, charterers, managers and intermediaries can leave significant exposure unresolved until shortly before the deadline. 

Many charter parties, including those incorporating BIMCO emissions trading provisions, allow charterers to transfer EUAs relatively close to the surrender date, he noted. 

While commercially flexible, Ioulianou warned that such arrangements can leave the party responsible for compliance exposed if allowances arrive late or are not transferred at all. 

“Owners may be reluctant to buy allowances because the charterer is contractually liable, while charterers may delay because the contract permits them to,” he noted, adding that “in the meantime, the company responsible for compliance remains accountable to the regulator so that mismatch creates avoidable market risk”. 

Ioulianou also pointed to the accelerating EU ETS phase-in, noting that the scheme covered 40 per cent of shipping’s verified emissions for 2024, rising to 70 per cent for 2025 and 100 per cent for 2026. 

He argued that verified emissions reports should be treated as an early financial risk indicator, rather than simply part of an annual administrative process. 

Once verified emissions are known, owners and operators should quantify their EUA exposure, agree the allocation with charterers and establish clear transfer dates well ahead of September, according to Ioulianou. 

He also called for charter-party arrangements to move away from a last-day approach to EUA transfers, with earlier milestones and clearer remedies for late delivery and associated costs. 

Owners should, at the same time, identify and purchase any known residual exposure at an early stage, he advised. 

This can include allowances arising from off-hire periods, operational adjustments or disputes, even where the owner’s eventual share represents only a small proportion of the vessel’s total liability, according to Ioulianou. 

Leaving those purchases until later can expose companies not only to counterparty risk but also to movements in EUA prices, he warned. 

EUAs, he stressed, “now need to be treated as a core part of voyage economics, counterparty management and liquidity planning, not as a September administrative task”, adding that “as exposure reaches 70 per cent and then 100 per cent, earlier allocation, earlier transfers and proactive purchasing will become essential to credible carbon compliance”. 

Ioulianou further argued that centralising emissions exposure, allowance allocation and transfer tracking can give operators earlier visibility of potential shortfalls and reduce the risk of a last-minute compliance scramble. 

With EU ETS exposure moving towards 100 per cent, his position is that earlier allocation, earlier transfers and proactive purchasing should become part of routine carbon compliance and commercial risk management.