17 APR 2025
The expansion of the European Union Emissions Trading System (EU ETS) to include the maritime industry has introduced significant financial and operational hurdles for all ship owners who are voyaging to or through EU ports. Ship owners must now purchase European Union Allowances regardless of the ship’s nationality.
European Union Allowances are market-driven instruments and must be purchased through one of the regulated carbon exchanges. The prices of the allowances fluctuate like other types of securities and have been highly volatile since its inception. Market analysts predict that the prices will increase dramatically over the next five years.
The first deadline for complying with this new obligation is September 2025, which means shipping companies have just 6 more months to calculate and purchase the required allowances to cover their 2024 emissions in order to comply and avoid penalties.
This article features insights and trends from Frederic Bouthillier, who is the Head of Shipping at Vertis Environmental Finance (STX), one of the largest ETS traders and market makers.
Bouthillier speaks to the importance of having a structured approach to allowance purchasing, exploring alternative fuels, and implementing technological solutions like Cyanergy’s real time emissions monitoring system — which will help ensure compliance while maintaining a competitive edge in an increasingly regulated market.
Impact of EU Emissions Trading System on Shipowners: Rising and Fluctuating Prices
The EU ETS is designed to drive carbon prices higher over time, making compliance an increasing financial burden for shipowners. “In 2-3 years from now, the price could be above €100,” Bouthillier warns. “The structural pricing mechanism is organized in a way that the price will keep rising.”
In addition, price fluctuations add complexity to cost management. The European Union Allowances price gained 15% in January before retracing downward in February. These fluctuations make cost forecasting a challenge for shipowners and force companies to adapt quickly to avoid excessive financial exposure.
Companies that underreport emissions risk fines of €100 per missing metric ton, plus the obligation to purchase the shortfall allowances at market rates. Additionally, non-compliance can lead to regulatory investigations, public disclosure of violations, and even suspension from the ETS.
Accuracy Is Critical: The Role of Technology
Accurate emissions reporting is essential for shipowners to comply with the EU ETS and manage costs effectively. Since allowances must be verified by independent auditors, errors in reporting—whether under or overestimating emissions—can have costly consequences.
The need for precise emissions monitoring goes beyond CO2, as other greenhouse gases like N2O and CH4 have significantly higher emissions factors. “That’s why it’s so important to ensure your emissions are monitored by volume and type in a very accurate way,” Bouthillier stresses. “If you’re short, it might cost you a lot of money. The first element is to have a system on board that allows you to monitor your emissions by volume and type.”
Cyanergy’s CE² Monitor, which collects engine and gas data every minute, enabling more accurate measuring and reporting. Courtesy of Cyanergy.
A Strong Incentive to Seek Competitive Solutions
With rising costs and regulatory risks, shipowners must seek ways to optimize their emissions strategy. Companies that fail to adapt risk falling behind competitors who are proactively managing compliance.
“If you don’t move, you will fall behind because the competition might be moving, and you will put yourself out of the game,” warns Bouthillier.
Shipping companies that leverage technology to monitor emissions in real time can gain a competitive edge by making informed decisions about when to purchase ETS allowances and how to optimize their fuel consumption.
The Importance of Real-Time Emissions Monitoring
In this volatile market, proactive emissions management is critical. “Under these circumstances, what is of paramount importance is to be proactive,” Bouthillier explains. “By getting a system like Cyanergy on board, looking at the market, optimizing— you’re going to mitigate the damage compared to someone who is waiting until the last minute. All the tools are there.”
Real-time emissions monitoring solutions, such as those offered by Cyanergy, provide shipowners with the accuracy and insight needed to navigate the complexities of the EU ETS. For shipowners looking to secure their compliance strategy and minimize costs, investing in advanced emissions monitoring technology is no longer optional—it’s a necessity.
Navigating EU ETS with Smart Solutions
Real-time emissions monitoring systems empower shipping companies with accurate data to optimize allowance purchasing, avoid penalties, and stay ahead of rising carbon costs. By investing in advanced monitoring solutions and proactive compliance strategies, shipowners can not only mitigate financial risks but also strengthen their position in an increasingly regulated industry.
This article is sponsored by Cyanergy, providing cutting-edge solutions for emissions monitoring and compliance. Learn more about their innovative technology here.
Automated Emission Monitoring for Shipping & Drilling
Greenhouse gas emission reporting is mandatory, but requirements can vary between countries and industries. That’s why Cyanergy partners closely with their shipping and drilling clients to tailor emission monitoring tools that seamlessly integrate with existing operations.
Our automated emission monitoring solutions utilize LoRaWAN technology to deliver precise and real-time greenhouse gas tracking. This ensures you meet compliance standards while minimizing manual intervention, saving both time and costs.
Cyanergy Emission Monitoring System
Engine Monitoring Device
Our proprietary monitoring device collects engine and gas data every minute utilizing a modem and standard communication protocols. The system uploads the data to a secured AWS cloud every five minutes, but more frequent measurements and uploading options are available.
Exhaust Gas Analyzer
Our advanced gas analyzer utilizes specialized sampling probes which are inserted into the exhaust pipes and measure up to six gasses. This enables direct measurement methods, which are usually lower and more accurate than the calculated values
Customized Dashboards and APIs
We create dynamic dashboards to meet our customers’ reporting needs and help them make operating improvements. The resulting engine and emission data is accessible in formats that are easy to import into other operational systems.
Emphasizing LoRaWAN Tracking
This system is designed to integrate seamlessly with your operations, leveraging LoRaWAN for long-range, low-power communication to ensure uninterrupted data transfer and monitoring.
Introducing Cyanergy’s CE² Monitor
Meeting ESG targets, such as emissions reporting, requires a technology ecosystem that is easy to install, highly modular, and scalable. Enter LoRaWAN, a game-changer for the maritime industry. At Cyanergy, we are pioneering the use of LoRaWAN to revolutionize maritime engine monitoring and emissions tracking.
There are several benefits to utilizing LoRaWAN for processes such as monitoring engine output and emissions:
- Ease of installation
- Adaptability
- Open source and global support network
- Low power consumption
- Cost effectiveness
LoRaWAN offers unparalleled benefits for the maritime industry, including ease of installation, adaptability, robust support, low power consumption, and cost-effectiveness. At Cyanergy, we are pioneering the use of LoRaWAN to revolutionize maritime engine monitoring and emissions tracking.
Ready to see the difference LoRaWAN can make for your fleet? Contact Cyanergy today for a demo and take the first step toward a more efficient and sustainable future.
Automated the data collection to eliminate manual tasks and accurately analyze emissions.
Optimized engine usage to reduce power needs for specific activities and lowering energy consumption.
Provided access to engine utilization to improve reliability and minimize downtime.
Success Story
We partnered with an international drilling company with a large fleet of offshore rigs in multiple countries. We were engaged to perform pilot tests on four rigs, with a goal of reducing their GHG emissions.
Drilling operations have various tasks, and each task has different engine power requirements. Our customer wanted to understand the correlation between different operational scenarios and the resulting engine loads, fuel consumption and emissions. By linking operation efficiencies and power loads, it can optimize the engine performance to reduce emissions.
We employed our system to engine loads and monitor fuel consumption in real-time, and built API’s to integrate our data with the rig activities. By examining power requirements for various operational scenarios, we identified optimal power load to establish guidelines for efficient engine use to balance operational efficiency with emissions reduction.
In our pilot tests, we were successful in developing an effective GHG emission tracking system that reduced the fuel and power load and provided access to streaming data analysis. As a result of the pilot test, our customer has begun rolling out our system.
Learn how you can cut emissions costs by up to 15% with real-time monitoring
Our team is available for on-site or virtual demos, executive briefings, and customized pitches for fleet operators, regulators, and industry partners.
The Future of Emissions Monitoring for Maritime and Offshore Operations
Lower your carbon allowance costs, streamline compliance, and reduce fuel waste with Cyanergy’s real-time monitoring solution.
Meet Emission Commitments at a Fraction of the Cost
With Cyanergy’s continuous emission monitoring system (CEMS), ships and rigs can reduce greenhouse gas emissions by up to 30% and cut fuel costs by up to 7% — all while automating compliance reporting and avoiding regulatory fees.
How? Our IoT-powered solution tracks fuel use and emissions every minute, providing real-time data for informed decision-making. With LoRaWAN-based sensors, direct exhaust gas measurement, and customizable dashboards, the system delivers precise, audit-ready data without the need for manual entry.
Automate
Eliminating manual calculations means time is spent analyzing results, not logging them
Optimize
Real-time information for faster decisions that reduce operating costs and emissions.
Integrate
Advanced sensors using LoRaWAN allow multiple sources of data in a central processor.
Engine and Emissions Data, All in One Smart Dashboard
From fuel flow to CO₂e tracking, our cloud-based platform simplifies compliance, saves time, and boosts operational efficiency.
Reduce carbon costs
Our emission monitoring system includes stoichiometric calculations that allow measurement of actual greenhouse gasses from engines. No more empiric tables or conversions. Since actual emissions are generally lower than the calculated measurements, it reduces carbon costs.
Lower fuel consumption
The system also tracks fuel consumption and power loads, which helps the operation teams monitor and adjust power engine performance to lower fuel consumption and cost. The potential fuel savings offset the cost of the system.
Streamline reporting
All engine and exhaust data are stored in a secure cloud data warehouse, and are accessible to analyze trends or make changes after lessons learned exercises. The customized reports and dashboards provide information needed in the mandatory sustainability reports and emission audits. This helps inform strategic decisions for future carbon accounting or financial compliance requirements.