Your 2027 and 2028 Carbon Cost, Modeled on Your Own Fleet

No IMO carbon price applies to fuel burned in 2027. On the draft approved at MEPC 83 in April 2025, the first reporting period is calendar year 2028. So for a ship trading to or from EU ports, the 2027 cost is the European one, and it is already law: the EU ETS surrender due by 30 September 2027 covers 100% of 2026 emissions, with methane and nitrous oxide included for the first time, and FuelEU Maritime holds its limit at 2% below its reference value with a penalty of €2,400 per tonne of VLSFO-equivalent. The IMO price is what would be added in 2028, at US$100 and US$380 per tonne of CO2 equivalent, if the framework is adopted as drafted.

Both can be modeled on your own fuel figures now. What follows is the arithmetic for two illustrative ships, a supramax bulk carrier and an MR product tanker, with every input stated and every step shown. The politics of the vote, and what a price does to the speed decision, are covered in What Global Carbon Pricing Does to Voyage Economics and What a Global Fuel Standard Does to Optimal Speed, both linked at the foot of this page.

2027: the part that is already law

Two European bills fall due in 2027, and neither depends on the IMO vote in December. The EU emissions trading system applies to ships of 5,000 gross tonnage and above calling at EU ports, whatever their flag. It counts all emissions on voyages between two EU ports and in port, and half of the emissions on voyages that start or end outside the EU. Allowances are surrendered each September against the previous year's emissions: 70% of 2025 emissions fell due on 30 September 2026, and from the surrender due by 30 September 2027 the share is 100%. The European Commission states that methane and nitrous oxide are covered "only as from 2026", so they first appear on the 2027 surrender.

For a ship burning fuel oil, those two changes are not the same size. On the factors the Coach Solutions calculator uses, adding methane and nitrous oxide raises the count for a tonne of heavy fuel oil from 3.114 to 3.163 tonnes of CO2 equivalent, about 1.6%. The step from 70% to 100% coverage raises it by about 43%. Together, the same fuel burned on the same trades needs about 45% more allowances on the 2027 surrender than it did on the 2026 one.

There is also a timing point that budgets tend to miss. Emissions in 2027 accrue at 100% as well, and are surrendered in September 2028. So a 2027 budget carries two European carbon numbers: the cash paid in 2027 for 2026, and the liability built up through 2027 for payment in 2028. On unchanged trades and an unchanged allowance price they are the same size.

FuelEU Maritime, Regulation (EU) 2023/1805, limits the well-to-wake greenhouse gas intensity of the energy used on board a ship, counted on the same basis: in EU ports, on voyages between them, and half of voyages into or out of the EU. Under Article 4 the limit is 2% below a reference value of 91.16 gCO2eq/MJ, which is 89.34, from 2025 until the 6% step in 2030. A ship burning only fossil fuel oil sits above it: heavy fuel oil comes out at about 91.7 on the regulation's own default factors. Annex IV converts the deficit into tonnes of VLSFO-equivalent at 41,000 MJ per tonne and charges €2,400 for each. Under Article 23 the penalty for the 2026 reporting period is due by 30 June 2027.

Two things change the size of that bill. The first is that the penalty is the cost of doing nothing, not necessarily the cost of compliance. The regulation allows a deficit to be closed by pooling with ships in surplus, borrowing against the following year's balance, or using biofuel or other lower-intensity fuel, so the penalty is the upper bound of the first year's cost. Pooling, Banking and Borrowing, linked below, explains these mechanisms. The second is that the penalty escalates. Article 23(2) multiplies it by 1 + (n − 1)/10, where n is the number of consecutive reporting periods for which the ship has been penalized. A ship penalized for 2025, 2026 and 2027 pays its 2027 penalty at 1.2 times the base.

2028: what the IMO price would add, if adopted as drafted

The IMO Net-Zero Framework was approved at MEPC 83 in April 2025 and has not been adopted. The draft is a new Chapter 5 of MARPOL Annex VI, circulated as IMO Circular Letter No.5005. Regulation 33 has each ship calculate its attained annual greenhouse gas fuel intensity, its GFI, for each calendar year from 2028, and Regulation 37 has it reported by 31 March of the following year. Regulation 35 sets two targets against a 2008 reference value of 93.3 gCO2eq/MJ. For 2028 the base target is 4% below it, 89.568, and the direct compliance target is 17% below, 77.439. Regulation 36 charges the gap. Emissions between the two targets are Tier 1, balanced with remedial units at US$100 per tonne of CO2 equivalent. Emissions above the base target are Tier 2, at US$380, unless covered by surplus units. Both are initial prices for the reporting periods 2028 to 2030, on a well-to-wake basis. Surplus units are earned by ships whose attained GFI is below the direct compliance target, and can be transferred to other ships at whatever price is agreed. As with the FuelEU penalty, US$380 is therefore the upper bound for the Tier 2 part rather than necessarily its price. The examples below price it in full.

Two features of the draft decide how large that is for a given ship. The first is scope. Under Regulation 30 in Circular Letter No.5005, the chapter applies to every ship of 5,000 gross tonnage and above except those trading solely in their own flag state's waters, and under Regulations 33 and 36 the charge is calculated on the total energy the ship used in the year, not on a European share of it. A ship that spends most of its year outside Europe would pay the IMO price on all of its fuel, most of which carries no EU carbon cost today.

The second is the width of the Tier 1 band. The band between the two targets is 12.129 gCO2eq/MJ in each year from 2028 to 2030, so every ship above the base target pays the same Tier 1 charge per unit of energy: about US$49 on a tonne of VLSFO in 2028. What differs between ships is Tier 2, which depends on each ship's fuel mix and on the emission factor the IMO applies to the fuel.

The status needs stating each time. MEPC 85 runs from 30 November to 3 December 2026, and the IMO has scheduled the resumed extraordinary session for Friday 4 December, subject to confirmation by MEPC 85. If the framework is adopted on 4 December, the MARPOL amendment procedure, with at least ten months to deemed acceptance and six months more to entry into force, would bring it into force in spring 2028 at the earliest, after the first reporting year as drafted has begun. Adoption could also slip into 2027: the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping notes that member states could adopt a framework at this meeting or in 2027, at the MEPC meeting planned for October or at another extraordinary session, which would push entry into force to 2029 at the earliest. Either way, that is the strongest argument for one of the proposals already tabled, from Australia, Canada, South Africa and the United Kingdom (Circular Letter No.5216). It leaves the framework otherwise unchanged but removes the 2028 target, so that it starts with the 6% base target in 2029. The worked example below shows 2029 as well for that reason.

The emission factor decides the IMO number

The usual way to estimate the IMO charge is to reuse the factors already sitting in a FuelEU calculation, because the IMO has not finished its own. The draft will not use them. Regulation 33 in Circular Letter No.5005 calculates each fuel's intensity under the IMO's own life cycle guidelines, resolution MEPC.391(81) of March 2024. Their initial default for VLSFO covers heavy fuel oil of ISO 8217 grades RME, RMG or RMK with more than 0.10% and up to 0.50% sulfur, and puts its well-to-tank emissions at 16.8 gCO2eq/MJ. FuelEU's Annex II puts heavy fuel oil at 13.5. The two also use different global warming potentials for methane and nitrous oxide, and slightly different energy contents: 40.2 MJ per kilogram for VLSFO in the IMO table, against 40.5 for heavy fuel oil in FuelEU's. Add the combustion emissions and VLSFO comes out at about 95.5 gCO2eq/MJ well-to-wake on the IMO defaults, against about 91.7 on FuelEU's.

All of that difference lands in Tier 2. In 2028 each 1 gCO2eq/MJ is worth about US$15 on a tonne of VLSFO. On FuelEU's factors, the 2028 charge on a tonne of VLSFO is about US$83, of which about US$49 is Tier 1. On the IMO's initial defaults the same arithmetic gives about US$139, almost all of the increase in Tier 2. The figure most often quoted, about US$75 a tonne, published by Ship & Bunker in April 2025, assumed 91 gCO2/MJ and 42.7 MJ per kilogram, which puts it below the IMO's own default.

The defaults are conservative by design. The guidelines set each well-to-tank default at the upper of at least three reference values (paragraph 9.3 of the guidelines), and allow a lower actual value to be used only once it has been certified by a third party (paragraph 11.4). They are also under review: the intersessional working group that met in September did not reach the life cycle item and carried it to its November session, pending the GESAMP-LCA working group's report. The IMO still lists MEPC.391(81) as the current guidelines, and new default factors are being prepared for review rather than adopted. One gap matters on the bunker delivery note: the table carries no well-to-tank default yet for VLSFO supplied as a lighter RMA to RMD grade, for gas oil above 0.10% sulfur, or for fossil LNG.

So the IMO figures below are indicative, and shown as a range rather than a single estimate. As in the calculator, the lower reading uses FuelEU's factors, so that the two regimes can be checked against each other, and the higher reading uses the IMO's initial defaults, for every fuel the IMO has set a default for.

Two ships, worked through

The inputs are illustrative, not drawn from any customer vessel, and the consumption figures are round numbers for a year's trading.

• •Ship A, a supramax bulk carrier trading worldwide: 5,000 tonnes of VLSFO (RMG grade) and 400 tonnes of MGO a year, with 20% of its energy in EU scope after voyages into and out of Europe are counted at half.
• •Ship B, an MR product tanker trading mainly in and out of Europe: 2,800 tonnes of VLSFO and 4,000 tonnes of MGO a year, with 60% of its energy in EU scope. The high gas oil share reflects time in emission control areas and at berth in EU ports, where fuel of 0.10% sulfur or less is required.
• •An EU allowance price of €80 a tonne, the calculator's default. It is an assumption, not a forecast. Every €10 moves Ship A's allowance bill by about €34,000 and Ship B's by about €131,000.

The European bill, for 2026 emissions and again for 2027

Ship A emits 5,000 × 3.1631 + 400 × 3.2551 = 17,118 tonnes of CO2 equivalent. A fifth of that is in scope, so it needs 3,424 allowances: €273,881 at €80. For FuelEU, its 219,580,000 MJ of energy averages 91.67 gCO2eq/MJ against the 89.34 limit. On the 43,916,000 MJ in scope that is a deficit of 102.4 tonnes of CO2 equivalent, or 27.2 tonnes of VLSFO-equivalent, and a penalty of €65,381. Together, about €339,000.

Ship B emits 2,800 × 3.1631 + 4,000 × 3.2551 = 21,877 tonnes. With 60% in scope it needs 13,126 allowances, €1,050,100. Its energy averages 91.16 against 89.34, which on the 170,520,000 MJ in scope is a deficit of 310.4 tonnes of CO2 equivalent, 83.1 tonnes of VLSFO-equivalent and €199,331 in penalty. Together, about €1.25 million.

These are the figures for 2026 emissions, paid in 2027. On unchanged trades they repeat for 2027 and for 2028, because the surrender share stays at 100% and the FuelEU limit does not move until 2030. The calculator shows the base FuelEU penalty and does not apply the consecutive-period multiplier, so a ship penalized in every year since 2025 should add 10% to its 2026 penalty and 20% to its 2027 one.

What the IMO price would add in 2028

The IMO charge is calculated on all of the energy, not the EU share. Ship A's 219,580,000 MJ averages 91.67 gCO2eq/MJ, above the 2028 base target of 89.568. Tier 1 is the full 12.129-gram band between the targets on all of that energy: 2,663 tonnes of CO2 equivalent, US$266,329. Tier 2 is the 2.10 grams above the base target: 461 tonnes, US$175,244. Total, about US$442,000. On the IMO's initial defaults the same ship would show about US$745,000.

Ship B's 284,200,000 MJ averages 91.16: Tier 1 of 3,447 tonnes, US$344,706, and Tier 2 of 452 tonnes, US$171,626. Total, about US$516,000, or about US$880,000 on the IMO's initial defaults.

If the first year moves to 2029, as the tabled proposal would have it, Table 4 of Regulation 35 tightens the base target to 87.702 and the direct compliance target to 75.573, and the totals rise to about US$597,000 for Ship A and US$718,000 for Ship B. By 2030, the last year the draft sets a price for, they reach about US$753,000 and US$919,000.

Put together for Ship A, the supramax: about €339,000 of European carbon cost on its 2026 emissions, paid in 2027, and, if the IMO Net-Zero Framework is adopted as drafted, about US$442,000 more for 2028 on FuelEU's emission factors, or nearer US$745,000 on the IMO's own initial defaults. The IMO price applies to all of its fuel, the European regimes to a fifth of it. For ships that trade mostly outside Europe, the draft IMO price is not an addition to an existing carbon bill. It is the first one.

Ship B is the other case. Most of its energy is already inside Europe's scope, so the IMO price would add to a bill it already pays. Where a voyage falls under both, Lloyd's Register expects the ship to be regulated twice and suggests there may be a way to report to both and pay once. Until that is settled, the cautious planning assumption for energy in EU scope is that both apply.

Four things commonly gotten wrong

• •"There is an IMO carbon cost in 2027." There is not. Under Regulation 33 of the draft the first reporting period is calendar year 2028, and one tabled proposal would move it to 2029. What 2027 would carry, if the framework is adopted as drafted, is preparation: Regulation 38 sets 1 October 2027 for each ship to hold an account with the IMO GFI Registry, but that date was drafted before the vote slipped a year and now falls before the earliest entry into force, so it would have to move.
• •"FuelEU's emission factors will do for an IMO estimate." On the IMO's current initial defaults, they understate it for fossil fuel oil, by about US$56 a tonne of VLSFO in 2028, as worked through above. Two regimes measuring the same fuel do not share their constants.
• •"The FuelEU penalty is a flat €2,400 per tonne." It escalates. Article 23(2) of Regulation (EU) 2023/1805 multiplies it by 1 + (n − 1)/10 for consecutive reporting periods in which a ship is penalized, so the third year in a row costs 1.2 times the first.
• •"Methane and nitrous oxide are what make the 2027 surrender bigger." For a ship on fuel oil they add about 1.6%, and the step from 70% to 100% coverage adds about 43%. LNG is different: where unburnt methane slips through the engine, as it does in Otto-cycle engines, methane adds far more, and the calculator does not yet distinguish LNG by engine type.

What a contract has to say about 2028

Who should pay is covered in What Global Carbon Pricing Does to Voyage Economics: BIMCO's position is that the party setting speed and route should bear the greenhouse gas cost, and draft Regulation 36, paragraph 7 preserves cost recovery for decisions on fuel, cargo, route and speed. The narrower question for 2027 is whether the clauses already in a fixture would reach an IMO charge at all.

BIMCO's ETS Allowances Clause for Time Charter Parties 2022 makes the party providing and paying for the fuel provide and pay for the allowances. It defines an Emission Scheme as a greenhouse gas emissions trading scheme, including the EU ETS "and any other similar systems" that regulate the issuance, allocation, trading or surrendering of Emission Allowances. The IMO framework is not built that way. Remedial units are acquired as contributions to the IMO Net-Zero Fund at a set price, and only surplus units move between ships. Whether that counts as a similar system for the purposes of the clause is a question for a P&I club or a lawyer, not something to assume. BIMCO's FuelEU Maritime Clause for Time Charter Parties 2024 is drafted around FuelEU's own pooling and banking mechanisms. A two-year time charter fixed in 2027 can run through the whole of the first IMO reporting period, so the wording agreed now is the wording that would be read in 2029.

What this cannot tell you

Three limits, stated plainly. The allowance price is an assumption, and the European figures scale with it. The IMO figures rest on draft text that has not been adopted and on default factors that are under review, so they are indicative however precisely the arithmetic is done, which is why the examples are rounded. And any of this is only as good as the fuel figures that go into it. The number a verifier accepts is the one reconciled to bunker delivery notes voyage by voyage, which is what EU MRV, FuelEU and, if it is adopted, the IMO framework will each be checked against.

Two things sit outside this arithmetic. The UK ETS has covered domestic UK voyages and all in-port emissions in the UK for cargo and passenger ships of 5,000 gross tonnage and above since 1 July 2026, with offshore vessels joining from 1 January 2027, and the first surrender, for 2026 and 2027 together, due by 30 April 2028. And the calculator does not yet distinguish LNG by engine type.

The 2027 number can be worked out today from figures every operator already reports, with only the allowance price left as an assumption. The 2028 number is indicative, and it depends more on which emission factor is used than on anything decided in December. What can be done before the vote is to run both on your own fleet, on the IMO's own defaults rather than borrowed ones, and know which of your ships the draft price would reach first.