In 2025, the twin pressures of environmental regulations and evolving geopolitical landscapes will shape the shipping industry’s trajectory, according to legal experts.Two key EU legislative developments will significantly impact the industry in 2025: the expansion of the EU Emissions Trading System (EU ETS) and the introduction of FuelEU Maritime (FUEM), Philip Roche, global co-head of shipping and partner, and Kelli Bodal Hansen, client knowledge director, at Norton Rose Fulbright said in a shipping note.
The EU ETS, which already covers certain vessels, will now encompass offshore vessels over 5,000 GT calling at EU ports.
“New challenges also remain for the vessels which have been subject to the EU ETS since 2024 in the next stage of compliance with the scheme,”
said Roche and Hansen. “Emissions data for the 2024 year must be reported on and verified, by an accredited verifier, by March 31, 2025. Shipowners and operators then have nearly six months – until September 30, 2025 – to submit the number of EUAs required to cover their emissions for 2024. Failure to do so can result in financial penalties.”
FUEM, applicable to all ships over 5,000 GT calling at EU ports, mandates a yearly reduction in greenhouse gas (GHG) intensity of energy used. Ship owners and operators will need to consider carefully the mechanisms to comply with the legislation, said Roche and Hansen. “These options include ‘pooling’ the compliance balance for a number of ships … to offset emissions from other vessels in the pool that cannot use such fuels.” However, the commercial basis on which these pools operate will need to be carefully considered.
Chartering arrangements will require significant attention, with parties needing to clearly define how the risks and costs of FUEM compliance will be allocated. “At the time of writing, it is clear that many companies have not worked out a strategy for dealing with this new challenge and we are seeing a lot of ‘agree to agree’ clauses inserted in contracts as placeholders,” noted the authors. “BIMCO has produced a comprehensive but consequently quite long and involved clause which some are finding hard to digest – largely caused by the issues arising on delivery and redelivery.”
Another regulation to watch in 2025 is the entry into force of the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships on June 26, 2025. This will significantly impact the industry and shipowners will need to ensure that their recycling plans for the year ahead comply with the HK Convention, said Roche and Hansen.
Sustainable finance and decarbonisation
Sustainability will remain a top priority for financiers in 2025. While the focus will likely continue on environmental targets, social and governance factors, such as gender diversity and improved crew working conditions, are expected to gain greater prominence.
“With the increase in environmental regulatory measures being introduced to the industry, financiers and borrowers will need to consider how they can set environmental targets which are ambitious enough to go beyond what companies are required to do by law, but also commercially achievable,” said Roche and Hansen.
Transition finance, aimed at decarbonising hard-to-abate sectors, is also expected to gain traction in the maritime industry.
Meanwhile, onboard carbon capture and storage (CCS), while offering potential for emissions reduction, faces significant challenges in 2025, according to the authors. “The equipment is expensive to install and to run; current units do not capture sufficient CO2; there is limited provision for offtake of captured CO2; many units use amines which escape to air and may cause potentially carcinogenic gases to form – and the current benefits are therefore marginal at best.”
Onshore CCS, with government support and a robust regulatory framework, presents a more promising avenue. “There has been much work on, and investment into, carbon capture technologies and CCS projects, with Norway, the UK and other northern European countries working hard to exploit the storage potential of geological storage in the North Sea,” said the authors. “For more isolated industrial centres, for instance SW England and South Wales, the transport of captured CO2 by ship is an attractive and perhaps the only commercially viable option.”
Tech focus
Turning to technology, Roche and Hansen said AI is poised to revolutionise ship management and trade, offering significant opportunities for increased efficiency, cost reduction, and emissions reduction. “With the increased regulatory focus on AI, those shipping companies looking to use AI applications in their business should carefully consider their compliance obligations in this respect,” warned Roche and Hansen. “Shipping companies will need to consider, for example, the effect of the EU Artificial Intelligence Act and what steps they will need to take to comply with the complex regulatory requirements in the different jurisdictions in which they operate.”
On the regulatory side, a new Failure to Prevent Fraud Offence under the Economic Crime and Corporate Transparency Act 2023 will come into force in the UK on November 1, 2025.
“Organisations will need to carefully review and where necessary, update their anti-fraud systems and controls to cover fraud committed for their benefit by employees, subsidiaries or third party agents,”
the authors said.
Meanwhile, the ongoing Russia-Ukraine war continues to fuel sanctions regimes, particularly targeting the “shadow fleet” transporting Russian oil. “The US, UK and Europe have recently introduced sanctions against this fleet,” said Roche and Hansen. “This is just a further step in increasing pressure from regulators to prevent owners inadvertently selling ships into the shadow fleet.”
The year ahead
Roche and Hansen expect 2025 to be a year of significant change and challenge for the shipping industry and suggest that increased co-operation between ship owners and operators is going to be “key in the year ahead” as the industry gets to grips with new regulatory, technological and emissions-based issues which need to be factored into day to day commercial and administrative operations.
Technological developments in new fuels, energy storage, carbon capture and radical new designs of ships will be crucial for achieving decarbonisation goals.
“Vision, finance and a certain amount of courage are going to be required if the challenge is to be met.”
But despite the numerous challenges, the authors believe the shipping industry remains resilient. “2024 was a good year for shipping which economically is in rude health. Shipping has survived all sorts of crises over the many centuries it has operated and seems in good shape to weather the many challenges that 2025 and beyond will present.”
Source: Baltic Exchange
