Buying older tonnage inside the EU ETS era is not just a question of whether the price looks cheap against five-year averages. From 2024 onwards, every inefficient tonne of fuel burned on EU-connected voyages comes with an explicit carbon bill in the form of emission allowances. Older ships that once looked like solid cash machines can turn into expensive carbon positions if you misjudge how often they will touch EU ports, how high allowance prices sit and how aggressively FuelEU Maritime pushes operators toward cleaner energy.
From 2024, large ships calling EU ports must buy emission allowances for every tonne of CO₂ in scope. Phase-in means 40 percent of relevant emissions in 2025, 70 percent in 2026 and 100 percent from 2027, with no free allocation for shipping. That turns fuel burn and trading pattern into hard costs that should be built into how you price older tonnage.
What an older ship is really committing to under EU ETS
EU ETS now covers CO₂ emissions from large ships over 5 000 GT that call EU and EEA ports, regardless of flag. Companies monitor emissions at voyage level through MRV and must buy and surrender allowances for the in-scope share. The system covers 100 percent of emissions between EU ports and at berth, and 50 percent of emissions on voyages in or out of the EU.
For 2025 and 2026, the sector benefits from a phase-in that reduces the number of allowances that must be surrendered. Shipping companies pay for 40 percent of verified emissions in 2025 and 70 percent in 2026. From 2027 onward, they must cover 100 percent of reported emissions in scope.
The older and less efficient a hull is, the more fuel it burns for the same work. Inside EU ETS that difference becomes a recurring cash cost. The decision to buy a fifteen-year-old ship at a discount is now also a decision to carry its carbon profile through the life of the investment, unless you refit or limit its exposure to EU trades.
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2024 emissions – 40 percent payable in 2025
Early carbon bills are noticeable, not decisive. Many owners tested how much of the cost they could pass on through charter clauses and surcharges. -
2025 emissions – 70 percent payable in 2026
Carbon is now a meaningful line in the voyage P&L for ships that trade frequently in or out of Europe, especially older fuel-hungry hulls. -
2026 emissions onward – 100 percent from 2027
From 2027, every tonne of CO₂ on in-scope voyages must be covered. At that point, buying a higher consumption ship is very close to buying a forward strip of EUAs.
Cheap headline price versus carbon reality
Old tonnage can still make sense. The danger is assuming that a low dollar per light-dwt is automatically a good deal when the EU carbon overlay might erase much of the discount.
How a “small” fuel gap turns into a carbon bill
As a rough example, assume an older MR tanker burns 4 tonnes per day more fuel on EU related voyages than a modern eco design. Using a standard emissions factor of about 3.1 tonnes of CO₂ per tonne of very low sulphur fuel oil, that extra fuel translates into a little over 12 tonnes of CO₂ per day.
If the ship spends 100 days per year on voyages partly or fully in scope of EU ETS and the allowance price averages 70 euro per tonne, the extra carbon cost from the older ship is on the order of 80 000 to 90 000 euro per year once 100 percent of emissions are covered. Stretch that over a five year hold and it is a material sum that either you, your charterers or both must absorb.
The point is not to chase false precision. The useful step is to translate “four tonnes per day more” into a simple allowance bill that you compare alongside interest, opex and dry docking when you look at the purchase price.
| Extra fuel per EU day | 4 tonnes |
| CO₂ per tonne fuel | ~3.1 t CO₂ / t fuel |
| Extra CO₂ per EU day | ~12.4 tonnes |
| EU linked days per year | 100 days |
| Annual extra CO₂ | ~1 240 tonnes |
| Allowance price example | 70 € per tonne |
| Annual extra ETS cost at 100 percent scope | ~86 800 € |
Numbers are illustrative only. Real outcomes depend on fuel type, exact routes, phase-in percentage and how much of the cost you pass on in contracts.
Use this to estimate the extra annual EU ETS bill from buying a less efficient ship instead of a younger reference vessel. It uses a simple emissions factor and assumes the same trade pattern for both.
- Enter the extra tonnes of fuel per day the older ship uses on EU related voyages.
- Add the number of EU linked days per year and an allowance price.
- Choose the phase-in level that matches the year you are analysing.
When buying older tonnage can still make sense under EU ETS
Older ships are not automatically stranded assets. They simply move into a new cost frame. Many buyers use a short checklist like this alongside traditional technical and market work.
- Most expected voyages are outside EU to EU-linked corridors.
- You have at least one realistic re-deployment route if EU exposure rises.
- Loan covenants and charters do not force you into EU heavy trades.
- You model allowance costs explicitly at different price levels.
- The deal still works if EUAs trade above recent averages for part of the hold.
- The upside case does not rely on perfect cost pass through to charterers.
- Either you have identified practical retrofits with clear payback,
- or you plan to recycle or sell before efficiency gaps become material under FuelEU and later targets,
- and you are not assuming a future buyer that ignores carbon obligations you already feel.
Buying older tonnage in the EU ETS era is no longer just about what you pay today versus where asset values might be in two or three years. It is also about the explicit carbon costs you take on for every voyage that touches Europe, and how those costs interact with FuelEU Maritime, retrofit options and the strength of your charter cover. The owners who will still feel comfortable with older ships in 2027 and 2028 are those who treat fuel burn and route exposure as hard cash items in their purchase models, rather than soft footnotes, and who are honest about whether they or their customers will ultimately pay for the difference.
