A new study by Erasmus School of Law at Erasmus University Rotterdam warns that shipowners and managers covered by the EU Emissions Trading System (EU ETS) may struggle to recover carbon costs from the parties responsible for a vessel’s operation, despite the EU Directive providing a statutory reimbursement right.

As explained in the paper “EU ETS payments in shipping: parties’ responsibilities towards authorities and within the commercial chain,” the current EU ETS statutory reimbursement mechanism is structurally flawed. Because it does not adequately account for private international law or the commercial realities of shipping, the researchers argue that the national reimbursement obligation is largely a “paper tiger.”

According to the study, the EU ETS Directive creates the impression that a statutory reimbursement obligation is sufficient and that contractual arrangements are unnecessary. In practice, however, clearly defined contractual responsibilities for purchasing and surrendering EU Allowances (EUAs) are essential. Without them, and without owners having access to voyage and fuel consumption data, carbon cost exposure remains a significant risk.

If the statutory reimbursement right cannot be relied upon, parties throughout the shipping chain need to make sure their own contracts are watertight on carbon cost allocation. Expecting that the statutory mechanism will be sufficient is a risky strategy

… commented Jolien Kruit, co-author of the study, endowed professor “Future of Maritime Law” at Erasmus School of Law and partner at Van Traa Advocaten.

The researchers found that, in practice, responsibility for carbon costs is determined by commercial contracts such as charterparties and management agreements rather than by the statutory mechanism. The study identifies three key obstacles to enforcing the reimbursement right:

  • Uncertainty over which party is liable in complex charter chains.
  • Conflicts with English law, which governs most shipping contracts.
  • The prevalence of arbitration outside the EU, where the statutory right may not be recognized.

As a result, the researchers argue that the reimbursement mechanism has limited practical value for much of the industry.

The research also finds that standard BIMCO clauses provide a useful framework for allocating ETS costs but are not sufficient on their own. They must be incorporated consistently throughout the contractual chain and may require additional provisions covering issues such as price volatility, off-hire, demurrage, and dispute resolution.

The EU ETS gives the impression that shipowners and managers who pay the carbon bill can automatically recover it from the party actually responsible for the ship’s operation or fuel purchase. Our research shows that this is largely an illusion once you look at how shipping contracts actually work

… said Hannah Mosmans, co-author and PhD researcher at the Department of Law and Markets, Erasmus School of Law, and Erasmus UPT, Erasmus University Rotterdam.

The findings have implications beyond the EU. The researchers note that the UK’s domestic shipping emissions trading scheme, which began on July 1, 2026, contains no statutory reimbursement right, while the IMO’s proposed Net Zero Framework could face similar challenges if it does not account for the realities of shipping contracts and private international law.

The authors conclude that future carbon pricing mechanisms should be designed with these commercial and legal complexities in mind.