The EU ETS Maritime, or European Union Emissions Trading System for maritime transport, is a European regulation executed in the Netherlands by the NEa. Its aim is to reduce greenhouse gas emissions from international shipping, currently estimated at 3% of total greenhouse gas emissions.
Implementation of the EU ETS Maritime involves several key mechanisms and processes. Shipping companies are required to monitor and report the greenhouse gas emissions of their ships using approved monitoring methodologies and reporting guidelines. They must surrender a corresponding number of emission allowances to cover their reported emissions. The total number of allowances available is gradually reduced over time, leading to higher prices, thereby incentivising the maritime transport sector to reduce its reliance on fossil fuels.
Objectives
The primary goal of the EU ETS Maritime is to incentivise emissions reductions and promote the adoption of cleaner technologies and practices within maritime transport. By putting a price on carbon emissions, the system encourages shipping companies to invest in fuel-efficient technologies, alternative fuels, and operational measures to minimize their carbon footprint. This not only helps to mitigate climate change but also drives innovation and competitiveness within the industry.
Scope
Most ships of 5,000 gross tonnage and larger are part of the EU ETS from January 2024. From that point on there is an obligation to monitor, report and verify (MRV), and to surrender emission allowances for their CO2 emissions.
The EU ETS Maritime covers all emissions from ships calling at an EEA port for voyages within the EEA (intra-EU) as well as 50% of the emissions from voyages starting or ending outside of the EU (extra-EU voyages), and all emissions that occur when ships are at berth in EEA ports. The flag of the vessel and the place of registry of the company are irrelevant. This broad scope ensures that emissions from a wide range of maritime activities are accounted for and regulated.
The obligation to surrender emission allowances will be implemented gradually:
- 40% of verified emissions in 2024
- 70% in 2025
- 100% in 2026
An example: in 2024, a ship traveling from a port outside of the EEA to an EEA port (for instance, Shanghai to Rotterdam) will first monitor all greenhouse gas emissions of that voyage. Then 50% of the total CO2 emissions is deducted. And over 40% of that number emission allowances must be surrendered in 2025.
Further implementation of ETS Maritime
The obligation to take part in the EU ETS will be further expanded in the future: large offshore vessels have monitoring, reporting and verification obligations from 2025. They will be obligated to surrender allowances from 2027.
Smaller vessels (general cargo vessels and offshore) between 400 – 5,000 tonnes will also have MRV obligations from 2025. It will be decided in 2026 or 2027 whether they will also have to surrender allowances from – at the earliest – 2027.