Insights on core questions from Deltamarin’s Energy Team

The introduction of FuelEU Maritime and the EU Emissions Trading System (EU ETS) marks a turning point in how vessels are designed, operated and evaluated over their lifetimes. These regulations bring new cost structures, compliance obligations and strategic implications – all shaped by a rapidly shifting fuel landscape and infrastructure uncertainty.

But this is just the beginning. At the recent MEPC 83 meeting, the IMO approved a suite of midterm decarbonisation measures that closely mirror the EU’s regulatory approach – but are even more ambitious. With global carbon intensity and fuel standard targets likely to come into force by 2028, shipowners will face increasingly strict emissions rules that demand long-term planning and flexible design.

At Deltamarin, the technical groundwork for navigating this evolving landscape is shaped by the company’s Energy Team, led by Bogdan Molchanov, a naval architect with deep expertise in systems modelling and digital ship simulation. Also including Annika Sandberg, a researcher focused on environmental and energy systems, the team continuously refines Deltamarin’s modelling tools and scenario frameworks. Their insights are already informing active ship design projects — ensuring that the impact of new regulations is considered today, not after the fact.

In this Q&A piece, Bogdan and Annika share how Deltamarin’s data-driven methodology can help anticipate risk, assess trade-offs and turn regulatory complexity into commercial advantage.

Find the questions below — clicking one will take you straight to the answer.

N.B.: For additional information and modelling calculations with emphasis on FuelEU, please refer to the following papers: Decarbonising long distance shipping with alternative fuels, technology synergy and digital design – case bulk carrier and Evolution of ship design from energy efficiency towards holistic sustainability.

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1.  How can ship design future-proof against the changing economics of compliance with these new regulations?
2.  What are the key sensitivity factors in predicting FuelEU and carbon costs?
3.  Excessive over-compliance as an advantage: How can shipowners turn compliance into profit?
4.  Pooling strategies: How can advanced modelling optimise compliance across a fleet?
5.  Lessons from real-world data: What do operational simulations reveal about FuelEU compliance?
6.  Fuel choice and infrastructure: What are the hidden risks in switching to alternative fuels?
7.  How can data-driven analysis determine the payback period for green investments?
8.  The cost of inaction: What are the real penalties for non-compliance?
9.  Wind and shore power: A true compliance solution or a short-term fix?
10.  The “FuelEU hack”: Can more energy consumption lead to more credits?
11.  Are there any emerging loopholes in the compliance landscape?

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1. How can ship design future-proof against the changing economics of compliance with these new regulations?

When future regulatory and economic conditions are uncertain, shipowners often delay investment decisions due to the risk of increased operational costs (fuel, crew) and compliance costs (taxes, penalties). An investment made too early may fail to pay off if the regulatory landscape shifts.

With data-driven design tools, we enhance our existing methodology to address this challenge. Traditionally, ship designs are evaluated based on a single data point — performance at design speed under ideal conditions. However, ships operate across a range of off-design conditions. This means that energy efficiency and sustainability systems should be optimized for actual operating profiles and environments rather than just a theoretical benchmark.

To future-proof ship designs, we integrate two critical layers into our simulations:

• Operational energy modelling – Accurate assessment of vessel performance under real-world conditions rather than idealized assumptions.

• Regulatory compliance mechanisms – Incorporating frameworks such as IMO’s Carbon Intensity Index (CII), the EU’s FuelEU Maritime and the EU (Emissions Trading Scheme (ETS), alongside multiple fuel price and tax/penalty scenarios.

By combining these layers, we can identify the most cost-effective compliance strategies, ensuring that investments in energy efficiency and alternative fuels deliver both regulatory compliance and long-term operational savings. This allows shipowners to navigate uncertainty while maintaining competitiveness in a rapidly evolving regulatory landscape.

Our simulation process begins very early in the design journey – often at the concept development stage before a contract is signed. This is where we can influence critical decisions about the vessel’s route, hull form, machinery configuration and space reservations for future retrofits. We use a digital ship model placed on real operating routes (via satellite AIS data) and simulate all ship systems under that profile – propulsion, electrical, HVAC, auxiliaries – to assess how energy flows and emissions evolve in real time.

Inputs for these models come from both in-house Computational Fluid Dynamics (CFD) tools and collaboration across the value chain: propulsion data from engine suppliers, hull performance metrics from our hydrodynamics team and historical operational data when available. This cross-functional approach allows us to build realistic and flexible ship concepts, tailored for future regulatory demands.

2. What are the key sensitivity factors in predicting FuelEU and carbon costs?

Fuel price volatility, emissions regulations and vessel operational profiles are all crucial. Our team tackles these challenges with a structured and adaptable modelling framework.

Firstly, fuel price fluctuations – especially for alternative fuels – are a major uncertainty. Instead of trying to predict exact prices, we use scenario-based modelling with low, medium and high-cost cases. These scenarios are informed by industry reports, regulatory roadmaps and client inputs.

Operational intensity is another critical factor. While fuel costs, taxes and freight-rate fluctuations are beyond our control, vessel operations – such as speed, routing, time in port and energy-efficiency investments – are within our clients’ influence. We model the impact of these factors on compliance costs, helping clients determine which operational strategies and technology investments offer the best performance across all scenarios.

Ultimately, our goal is to provide comparative analyses of different technologies and operational measures under various cost assumptions. This approach ensures our design is adaptable to the future regulatory pressures and market volatility.

Our modelling system includes digital optimisation tools where relevant. Technologies like engine control systems, remote monitoring and voyage optimisation software are all factored into operational strategy simulations. We run digital vessels through full voyage profiles – not just design conditions – and simulate emissions and energy consumption across these journeys. These models are dynamic: they incorporate updated vendor data, new battery or fuel cell specs and revised fuel price curves as they become available.

We also maintain internal codebases and technology databases to avoid reinventing the wheel. If a specific engine, fuel type or weather route has already been modelled in a previous project, we reuse that data in a tailored way, improving both the efficiency and the accuracy of the modelling. Lessons learned carry over into future design work, allowing us to continuously refine our understanding of cost drivers and compliance risk.

3. Excessive over-compliance as an advantage: How can shipowners turn compliance into profit?

The FuelEU regulation aims to incentivise early movers and build a critical mass of sustainable ships operating in the European Economic Area (EEA). This helps solve the chicken-and-egg problem of developing ships that can use sustainable fuels and energy-saving devices while the infrastructure around them evolves to supply the needed sustainable energy mix.

By over-complying and choosing the best compliance strategy, shipowners can generate surplus compliance credits. These credits can be sold to a pool or banked, allowing shipowners to recover money through pooling, optimise costs by banking or even do both.

It is important to note that pooling surplus credits might not always recover the added cost of a sustainable fuel mix. At this point, we have found that cost-effective options – such as electricity, LNG with low methane slip, and sometimes biofuels – can result in positive cash flows if the surrounding infrastructure and operating pattern are right for the vessel.

Cooperation with stakeholders across the value chain, data analytics and forecasting play a crucial role in this process. They help us model different scenarios with realism and predict the financial returns of surplus compliance credits. By understanding market conditions and operational profiles, we can provide shipowners with insights that help them optimise their vessels for over-compliance and turn compliance into profit.

We have found that the first decade of FuelEU implementation is where over-compliance is most valuable. That’s when early movers benefit the most from pooling mechanisms and when sustainable fuels are still relatively scarce and costly. After 2030, as compliance thresholds tighten and sustainable fuels become the baseline rather than the exception, the value of over-compliance credits will likely decline.

This makes early investment – and careful simulation of credit revenue versus fuel cost – a strategic opportunity, especially for ships with long EU exposure or those positioned on green corridors with access to shore power and alternative fuels. Our job is to help owners spot these opportunities early and build ships that can maximise them.

4. Pooling strategies: How can advanced modelling optimise compliance across a fleet?

Fleet-wide compliance strategies, including pooling emissions across multiple vessels, can be highly effective. By simulating different compliance scenarios during the concept phase, we can get a clear idea of future costs and the most suitable compliance strategies.

One example of vessel types that would benefit from acting as receivers in the pool is ocean-going vessels that spend little time in the EEA zone; these might find it more beneficial to pool with sustainable vessels rather than undergo retrofits, as they are not under EU regulations for most of their operational time.

As ship designers, we provide value by understanding what is technically and financially feasible. We identify retrofit solutions that offer the best ROI when considering FuelEU, EU ETS and energy costs. We can build a roadmap for the vessel, determining the optimal time for retrofits and alternative compliance strategies during each segment.

Of course, we have to look at decarbonisation and rule compliance holistically. For instance, shore power is potentially the biggest emission-cutting step many cruise ships can take due to high electrical loads and prolonged port stays. On the other hand, when shore power is connected and diesel engines are shut down, no waste heat is produced that is typically used to cover the high thermal load of the cruise ship. In this case, fuel must be burned in boilers to generate heat. One solution designers can do is come up with ways to minimise thermal energy usage in port and provide technical solutions such as thermal storage tanks and heat pumps to reduce use of boilers, thus further improving a vessel’s energy efficiency and compliance.

This example highlights the importance of thinking holistically about ship systems – how they connect to both energy efficiency and regulatory compliance – and which changes benefit both. Thermal energy management, while often overlooked, plays a central role in FuelEU strategies for high-load vessels. If ignored, boiler consumption can triple or quadruple annually after shore power is introduced, offsetting much of the environmental gain.

5. Lessons from real-world data: What do operational simulations reveal about FuelEU compliance?

As designers, we can make tailor-made recommendations after analysing a vessel’s design and intended operating pattern. By determining the most suitable technology mix for installation, we ensure compliance with all existing and potentially upcoming regulations. This proactive approach allows us to support the maritime industry in achieving its fuel efficiency and emissions-reduction goals while navigating the complex regulatory landscape.

Usually, LNG with low methane slip comes as a good compliance strategy for the first decade, especially if paired with shore power in ports. We found that slightly over-complying and banking credits for future use might be a smart solution for those vessels, allowing flexibility to switch to HFO or diesel when LNG prices are high.

Our simulations have revealed that vessels might reduce compliance costs within the EEA zone by adjusting their routes to call at ports near the EEA boundary. This strategic adjustment helps minimise expenses without violating intent, and it also underscores a key insight: if rules only apply to part of the world, emissions will shift, not disappear. To make real impact, regulations need global alignment.

Our modelling also allows us to evaluate the interaction between compliance measures and practical operation. For instance, adding shore power is not just about plugging in – it changes the thermal energy dynamics onboard, requiring either additional systems or behavioural adjustments. These kinds of interactions are simulated and quantified in advance using our system modelling framework.

6. Fuel choice and infrastructure: What are the hidden risks in switching to alternative fuels?

The transition to alternative energy sources in shipping presents both opportunities and challenges. While these fuels offer viable compliance pathways, they also introduce uncertainties — particularly regarding infrastructure readiness, fuel availability and pricing volatility.

To navigate these complexities, we integrate insights from class societies, regional authorities and our clients’ firsthand knowledge of local infrastructure. This enables us to assess fuel accessibility and long-term feasibility in relation to specific ship designs and operating areas.

Among alternative fuels, biofuels may seem like the most immediate solution. However, their scalability remains constrained by competing demand from land and aviation sectors. The regulatory framework of FuelEU supports a phased transition, allowing infrastructure to develop alongside increasing low-carbon fuel requirements. While pooling mechanisms offer flexibility in the early years, their role will diminish as stricter compliance measures take effect and fuel availability evolves. This is by design – the regulation aims to reward early movers with more credit value in the initial years. Over time, as more vessels comply and the infrastructure matures, the credit pool will normalise and offer diminishing returns.

Given these uncertainties, a forward-thinking design approach is essential. Ensuring vessels are “alternative fuel ready” or “shore power/battery ready” provides the flexibility to accommodate full or phased retrofits, distributing investment over the vessel’s lifetime while mitigating financial and operational risks. Future-proofing begins at the earliest stages of design, where careful planning of space reservations, system integrations and structural considerations facilitates a seamless transition to lower-carbon energy sources as infrastructure matures.

Our team stays at the forefront of market developments by continuously analysing insights from class, fuel suppliers and pool managers, combined with direct industry engagement. In addition, we actively accumulate and reuse project-specific data – such as vendor fuel specs or battery characteristics – within our internal modelling database. This institutional memory allows us to improve the fidelity and efficiency of each new project.

By embedding adaptability into ship design from the outset, we enhance long-term resilience and ensure shipowners can confidently navigate an evolving regulatory and fuel landscape.

7. How can data-driven analysis determine the payback period for green investments?

Assessing the energy efficiency, fuel consumption and payback period of energy-saving technologies has long been an integral part of Deltamarin’s ship design and retrofit projects. We leverage model-based design in MATLAB and Simulink to create physics-based simulations of a ship’s subsystems and their interactions. This enables us to calculate annual energy consumption accurately under different operational scenarios.

A key aspect of our approach is comparative simulation. For instance, we can model a baseline vessel alongside an alternative design incorporating waste heat recovery technologies, such as Organic Rankine Cycle (ORC) units. By analysing the differences in Capex and Opex between these cases, we can determine the economic feasibility of the investment.

With the added impact of regulatory frameworks like the EU ETS and FuelEU, our analysis extends beyond fuel savings alone. We integrate regulatory compliance layers into our models, allowing us to quantify the financial benefits of emissions reductions. This enhanced approach provides a more comprehensive ROI calculation that accounts for evolving environmental regulations.

The payback period for low-emission technologies is heavily influenced by fuel and carbon pricing dynamics as well as the market value of FuelEU surplus credits. While some low-carbon fuels, such as e-fuels, may currently struggle to generate a positive ROI due to high production costs, other solutions – such as fully battery-powered vessels – can achieve rapid payback as soon as charging infrastructure becomes widely available.

MATLAB functions as the underlying programming environment, while Simulink is used for visual, block-based simulation of subsystems. For example, we can model a shaft generator as a block that receives mechanical input from the main engine and converts it into electrical power, which is then consumed by other blocks like HVAC or propulsion support systems. These subsystems interact dynamically based on the vessel’s route, speed profile, and fuel choice.

Our models also incorporate vendor data and operational experience, which we collect and curate over time. This allows us to refine assumptions and generate increasingly precise ROI forecasts for both newbuild and retrofit cases. If a vessel is shore-power-ready, for instance, we can simulate not only energy savings but also emissions credits and boiler fuel use changes. This is what enables truly robust investment analysis.

8. The cost of inaction: What are the real penalties for non-compliance?

Failing to comply with FuelEU Maritime and the EU ETS results in significant financial penalties. Under FuelEU, vessels are charged €2,400 per tonne of VLSFO-equivalent for every unit of energy exceeding the compliance threshold. In many cases, even high-cost fuels like e-fuels will be more economical than paying these penalties.

Non-compliance also carries longer-term risks. If a vessel fails to meet compliance targets over two consecutive reporting periods, it could face expulsion orders from EU ports, severely impacting operations and commercial viability.

Strategically, compliance is always more cost-effective than penalties. Early investment in efficiency and alternative fuels not only offers a competitive advantage and regulatory flexibility but also improves a vessel’s freight rates, resale value and potentially its recovery cost at the end of its lifecycle.

To optimise costs, shipowners must use reality-driven scenario modelling to identify tipping points – where the cost of penalties exceeds the cost of compliance investments. This approach enables informed decisions on fuel choices and technology investments, ultimately minimising compliance costs.

Moreover, we anticipate the emergence of hotspots and green corridors that will accelerate the transition to a more sustainable fleet. These are likely to form organically in areas where there is a strong intersection of infrastructure investment, regulatory support and operational need. For instance, North Sea ferry routes or cruise itineraries in Western Europe – where shore power and sustainable fuel access are being mandated – are natural candidates.

While we do not yet have firm case studies, we expect these corridors to emerge through coordinated efforts between ports and operators. One plausible scenario could involve route-level agreements where fuel suppliers, infrastructure providers and fleets coordinate to create a reliable supply chain for low-emission fuels and services. These routes will naturally become preferred lanes for compliant vessels – and disincentivise outdated tonnage.

Early movers who make the right investments will be rewarded not only by improved market positioning but also by potential EU research funding, IMO green transition funds and the broader market itself.

9. Wind and shore power: A true compliance solution or a short-term fix?

Shore Power: While shore power is currently assumed to be zero-emission in regulations, this is subject to debate as the real carbon footprint depends on the electricity mix in each region. Nevertheless, the current regulatory framework incentivises electrification within the industry, and we see this as a necessary measure.

For the majority of traditionally built ships, shore power is likely to have a limited impact on reducing emissions, as it can only be utilised when the vessel is docked at a port with the necessary infrastructure. If shore power is available in all ports, it could help ships meet compliance targets until the end of this decade, particularly for vessels that spend a significant amount of time in EU waters.

However, many merchant vessels operate outside the EU for a large portion of their time, meaning shore power’s effectiveness is proportional to the time spent in EU ports. The compliance benefit also needs to be weighed against the side-effects: when shore power replaces diesel-engine use in port, waste heat from the engines disappears, and ships often end up burning boiler fuel to compensate for the thermal load. This is especially critical for cruise ships, where thermal demand is high. As designers, we must model and provide solutions such as thermal storage, heat pumps and smarter HVAC systems to offset these secondary energy costs.

Wind Power: Currently, wind-assisted propulsion is primarily a design-based solution, offering a potential compliance pathway for vessels using traditional fuels like HFO until approximately 2030. However, the effectiveness of wind power is highly route- and vessel-dependent, meaning the actual fuel and emission savings must be evaluated on a case-by-case basis.

For instance, tankers and bulk carriers crossing the North Atlantic or Pacific have significant potential to benefit from wind power – especially where voyage length and exposure to wind are consistent. On the other hand, vessels transiting low-wind zones (like the Mediterranean or Suez Canal) or operating on short feeder routes are less likely to see value. In some cases, rotor sails or kites may even need to be deactivated during certain passages or interfere with port operations.

We believe incentivising wind power through regulations like FuelEU is beneficial because it promotes a shift toward energy reduction strategies, which can ultimately lower the overall energy demand of the shipping industry. This shift not only helps ships meet compliance targets but also contributes to a broader paradigm change towards more sustainable operations.

10. The ‘FuelEU hack’: Can more energy consumption lead to more credits?

The idea of consuming more energy to generate additional compliance credits has been speculated. Theoretically, there may be cases where using more energy could result in additional revenue, particularly for vessels that use a sustainable fuel mix with a cheaper premium than the cost of surplus compliance credits. In such cases, the financial benefits of generating additional credits could potentially outweigh the costs of energy consumption.

However, in most scenarios, energy savings – driven by more efficient vessel operations, fuel alternatives and technologies – will outweigh any potential credit revenue. Additionally, regulatory frameworks are designed to reward efficiency, and consuming excess energy may not lead to long-term benefits.

Given the trend of digitalisation and reporting, regulators will likely have the tools to identify and flag operators attempting to exploit such loopholes. With increasingly granular monitoring platforms like DNV’s MRV system, suspicious patterns will be visible – and regulators can act accordingly.

Any strategy that involves excessive energy consumption to generate credits is likely to be short-lived, as regulatory scrutiny will close such gaps in the system. We believe the long-term direction is clear: towards lower total energy demand, higher efficiency, and closer tracking of lifecycle carbon data. In short, overconsumption, even if momentarily lucrative, will not be supported by the regulatory evolution.

11. Are there any emerging loopholes in the compliance landscape?

As emissions regulations evolve, ship operators often look for ways to navigate the complexities of compliance. The FuelEU and EU ETS frameworks, while designed to enforce more sustainable practices, could potentially have vulnerabilities that might be exploited under certain conditions.

One potential loophole lies in the reporting and verification processes, particularly with FuelEU. The regulation is based on energy allocation, not actual emissions. This creates an opportunity for operators to use a sustainable energy mix obtained outside the EU, potentially allowing them to report a lower carbon intensity than their actual emissions would suggest. The challenge here is that verifying the authenticity of fuel production pathways from outside the EU could be difficult, leading to gaps in compliance accuracy.

Another potential workaround could involve port calls at non-EU locations just before entering or just after leaving EEA waters. This strategy could minimise the vessel’s exposure to FuelEU and EU ETS compliance costs. However, the inclusion of major transshipment ports in the “start/end of voyage” definitions now limits the effectiveness of such manoeuvres.

To prevent circumvention of compliance regulations, data-driven compliance monitoring plays a critical role. With centralised data collection systems in place – such as those managed by class societies – regulators can more effectively identify discrepancies and ensure compliance is based on actual operational data. Continuous monitoring of fuel consumption, operational routes and emissions performance is essential to detect unintended non-compliance and ensure operators adhere to the regulatory framework.

While the current frameworks are still evolving, the direction of travel is clear: loopholes will close, data requirements will tighten and digital tools will become central to ensuring integrity. Deltamarin’s role as designers and advisors is to help shipowners stay ahead of the curve – not by exploiting grey zones but by building ships and strategies that succeed even when the rules harden.