In a significant move to combat climate change, the European Union expanded its Emissions Trading System (EU ETS) in January 2024 to include CO2 emissions from large ships. This action on maritime transport emissions applies to all vessels exceeding 5,000 gross tonnage entering EU ports, regardless of their flag. This regulation marks a crucial step towards decarbonizing the shipping industry and integrating it into the broader EU climate policy framework.
The EU ETS now encompasses a substantial portion of maritime emissions, specifically:
- 50% of emissions from voyages to or from non-EU countries. This shared responsibility encourages international cooperation in addressing shipping emissions, while allowing third countries to implement their own measures for the remaining emissions.
- 100% of emissions generated during voyages between two EU ports and while ships are within EU ports. This ensures comprehensive coverage of emissions within the EU’s jurisdiction.
Initially, the EU ETS for maritime transport focuses on CO2 emissions. However, starting in 2026, it will also include emissions of CH4 (methane) and N2O (nitrous oxide), further broadening the scope of greenhouse gases covered and strengthening the environmental impact of this action.
Integrating Maritime Emissions into the EU ETS Cap
Maritime emissions are now integrated into the overall EU ETS cap. This cap sets a limit on the total amount of greenhouse gases that can be emitted by all sectors included in the system. Crucially, this cap is designed to decrease over time, aligning with the EU’s ambitious climate objectives. This declining cap acts as a strong incentive for the maritime sector to adopt energy-efficient technologies, explore low-carbon fuels, and reduce the cost gap between sustainable alternatives and traditional fuels. This action promotes innovation and investment in cleaner shipping solutions.
This expansion of the EU ETS builds upon existing frameworks, notably the revised EU Monitoring, Reporting and Verification Regulation for maritime transport (MRV Maritime Regulation). This regulation ensures a robust and transparent system for tracking and reporting shipping emissions, which is essential for the effective implementation of the EU ETS in the maritime sector.
How the EU ETS Works for Shipping Companies: Compliance and Allowances
In practical terms, shipping companies are now obligated to participate in the EU ETS. They must purchase and surrender EU ETS emission allowances for each tonne of CO2 equivalent emissions reported under the system’s scope. EU Member States’ administering authorities are responsible for ensuring compliance, applying similar rules and procedures as those already in place for other sectors within the ETS. This ensures a level playing field and consistent enforcement across industries.
To facilitate a smooth transition for the maritime sector, a phased approach has been implemented. Shipping companies will initially surrender allowances for a percentage of their verified emissions during a phase-in period:
- 2025: Companies surrender allowances for 40% of their emissions reported in 2024.
- 2026: The requirement increases to 70% of emissions reported in 2025.
- 2027 onwards: Full compliance is required, with companies surrendering allowances for 100% of their reported emissions.
The first deadline for surrendering allowances is set for September 2025. This covers emissions reported from January 1, 2024, to December 31, 2024. This timeline provides shipping companies with a clear path to compliance and allows for necessary adjustments.
The regulations also include a reporting and review clause. This ensures ongoing monitoring of the maritime sector’s implementation of these rules and allows for adjustments to be made in response to developments at the International Maritime Organisation (IMO) and within the industry itself.
These rules, adopted on May 16, 2023, and effective from June 5, 2023, are further detailed in various implementing and delegated acts that clarify the operational aspects of including maritime emissions in the EU ETS.
Legislative Framework and Supporting Acts
The inclusion of maritime emissions into the EU ETS is underpinned by a comprehensive legislative process and supplemented by several implementing and delegated acts. These acts provide detailed guidelines and ensure the timely and effective integration of maritime transport emissions into the EU ETS framework.
These supporting acts cover crucial aspects such as:
- Administration of shipping companies: Defining the responsibilities of Member States in managing shipping companies within the ETS.
- Submission of aggregated emissions data: Establishing procedures for companies to submit emissions data at the company level.
- Rules for monitoring greenhouse gas emissions: Specifying the methodologies and requirements for monitoring emissions.
- Updates of relevant templates: Providing standardized templates for reporting and compliance.
- Verification and accreditation procedures: Ensuring the credibility and accuracy of emissions reporting through verification processes.
- Identification of neighbouring container transhipment ports: Addressing specific cases related to transhipment activities.
- Specific provisions for small islands and transnational routes: Considering unique circumstances for public service obligations and contracts under the ETS Directive.
The European Commission is supported by a dedicated maritime group within the Expert Group on Climate Change Policy (CCEG), comprising experts from Member States, in preparing these acts. Furthermore, consultations with the European Sustainable Shipping Forum (ESSF), which includes industry representatives and civil society organizations, and the European Maritime Safety Agency (EMSA) ensure a collaborative and informed approach to policy development.
The EU Climate Change Committee has provided favorable opinions on several implementing acts, which have been adopted by the Commission and published in the Official Journal of the European Union. Delegated acts have also been published, further detailing the regulatory landscape. An implementing act listing islands, ports, and transnational public service contracts subject to specific derogations under the ETS Directive has also been adopted. Moreover, the Commission has published a list of shipping companies with their assigned administering authorities, ensuring clarity and accountability.
Monitoring, Reporting, and Verifying GHG Emissions: The MRV Maritime Regulation
Since January 1, 2018, large ships exceeding 5,000 gross tonnage calling at ports in the European Economic Area (EEA) have been required to monitor and report their GHG emissions under the MRV Maritime Regulation. Initially focused on CO2, this regulation now includes nitrous oxide and methane emissions from January 1, 2024, aligning with the expanded scope of the EU ETS.
The MRV Maritime Regulation was designed as a preliminary step towards integrating maritime emissions into the EU ETS. Recognizing the need for alignment, the MRV Maritime Regulation was revised in 2023 to complement the EU ETS inclusion. This revised regulation, along with four other supporting legal acts, forms the basis for monitoring, reporting, and verifying emissions data.
Key obligations for companies under the MRV Maritime Regulation include:
- Monitoring: Companies must monitor greenhouse gas emissions, fuel consumption, and other relevant parameters for each ship, adhering to their monitoring plans. This data, collected per voyage, forms the basis of annual emissions reports.
- Emissions Report: Companies are required to submit verified emissions reports for each ship operating in the EEA in the previous calendar year by April 30th annually (March 31st from 2025 onwards), using the THETIS MRV platform. From March 31, 2025, reports must also be submitted to the responsible administering authority via THETIS-MRV.
- Document of Compliance: By June 30th each year, companies must ensure that all their ships visiting EEA ports carry a Document of Compliance, demonstrating adherence to the MRV regulation. This document may be subject to inspections by Member States’ authorities.
The European Commission publishes an annual report on the GHG emissions and energy efficiency of the monitored fleet, providing transparency and public access to key data on maritime emissions.
Maritime Transport and the European Green Deal
The inclusion of maritime emissions in the EU ETS is a vital component of the European Commission’s broader “Fit for 55” package. This package of legislative proposals aims to deliver the European Green Deal, the EU’s ambitious strategy to achieve climate neutrality by 2050. Expanding the EU ETS to maritime transport demonstrates concrete action towards this goal.
This measure is part of a wider set of initiatives addressing maritime transport’s climate impact, including measures to promote the uptake of sustainable maritime fuels under the FuelEU Maritime initiative and to stimulate demand for renewable and low-carbon fuels.
This comprehensive approach reflects the EU’s commitment to reducing greenhouse gas emissions from the shipping sector by addressing various barriers to decarbonisation, including technological and economic obstacles. The Commission’s strategy focuses on two complementary pathways: enhancing energy efficiency and promoting the use of cleaner fuels. These actions are designed to create a supportive ecosystem for sustainable fuels, stimulating demand, distribution, and supply simultaneously.
In addition to these regulatory measures, the EU continues to advocate for global action at the International Maritime Organisation (IMO) and supports research and innovation in maritime decarbonisation through programs like Horizon Europe and the Innovation Fund. These multifaceted efforts demonstrate the EU’s commitment to taking action on maritime transport emissions and fostering a sustainable future for the shipping industry.
