The EU ETS shipping rules have applied since 1 January 2024, bringing greenhouse gas emissions from large ships into the European Union's Emissions Trading System for the first time. Companies operating cargo and passenger ships of 5,000 gross tonnage and above that call at EU ports must now account for their emissions and buy and surrender allowances for them, whatever flag their vessels fly.
Corporate INTL Newsroom · Maritime & Shipping
EU ETS Shipping Rules Take Effect as Large Vessels Enter the Carbon Market
By The Corporate INTL Newsroom · 3 January 2024
The extension was proposed in July 2021 as part of the Fit for 55 package, formally adopted by the European Parliament and the Council in April 2023, published in the Official Journal on 16 May 2023 and in force since 5 June 2023, according to a European Commission presentation on maritime reporting and enforcement. It builds on the monitoring, reporting and verification system that has required large ships calling at European ports to report their emissions since 2018.
What the EU ETS shipping rules cover
Coverage depends on the route. The scheme covers 100% of emissions from voyages between two EU ports and while ships are within EU ports, and 50% of emissions from voyages that start or end outside the EU. For 2024 and 2025 only carbon dioxide is covered; methane and nitrous oxide are added from 2026. Large offshore ships are due to be brought within the scheme from 2027.
The cost is phased in. Shipping companies will surrender allowances for 40% of their 2024 emissions and 70% of their 2025 emissions, with a full price signal applying to emissions reported from 2026. The first surrender deadline is in September 2025 and covers emissions from 1 January to 31 December 2024, the Commission's page on reducing emissions from the shipping sector explains.
Who is affected
The obligation sits with the shipping company responsible for each vessel. Each company is attributed to an administering authority in one EU Member State, which oversees its monitoring plan, emissions reports and allowance surrenders through a single account in the Union Registry. Operators trading to and from EU ports will need to budget for allowance costs voyage by voyage and decide how those costs are allocated under their existing charter and freight contracts.
What happens next
The first reporting period runs from 1 January to 31 December 2024, with verified emissions reports due in early 2025 before the first surrender in September. The Commission has been completing a series of implementing and delegated acts on monitoring, verification and the administration of shipping companies. With the surrender share rising each year, the EU ETS shipping regime will reach its full effect only for emissions reported from 2026 onwards.
Sources
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