The EU ETS: Embracing the Maritime Sector

Integrating Shipping into the EU ETS Framework

Today’s EU Emissions Trading Scheme has evolved to include European and global shippers. Which collectively transported over 11 billion tonnes of goods this year.

Driven by the recently passed Fit For 55 legislation by the European Parliament. The maritime industry is undergoing substantial transformations in the ETS marketplace.

The compliance mandate, which started on January 1, 2024, includes:

• 100% of a vessel’s emissions from voyages between EU and EEA ports.
• 50% of emissions from international voyages between EU/EEA and non-EU/EEA ports.

The phased approach requires shipping companies to gradually purchase and surrender allowances, beginning with 40% of verified emissions in 2024 and increasing to 70% in 2025, with full coverage required annually from 2026 onwards.

Shipping accounts for 3% of global greenhouse gas (GHG) emissions, whilst European shipping contributed 124 million tonnes of CO2 in 2021, approximately 3-4% of total EU CO2 emissions. This inclusion of shipping in the ETS aligns with the “Fit for 55” goal, aiming to decrease GHG emissions by a minimum of 55% by 2030.

Industry Preparation and Utilisation of EUA Markets

This policy move will have far-reaching effects on the industry and broader emissions reduction efforts. Maritime businesses must prepare for the phased-in approach and navigate various regulatory requirements as carbon emissions become integral to their operations. Maritime companies, like other large emitting industries, can utilise existing EUA markets to hedge costs and stabilise prices. EUA futures on EEX provide firms with such opportunities, along with access to EEX’s spot and auction markets.

Leveraging Market-Based Compliance Programs

Ultimately, maritime, aviation and other industry sectors will fall under the EU’s market-based compliance program, which has proven to be the most cost-effective method for emission reduction. We believe the shipping industry can innovate and utilise these markets to meet emissions goals effectively.

For further information:

For further information about the EU ETS and its implications for the shipping industry. Please visit our dedicated page at https://theincubex.com/shipping-and-eu-ets/. To obtain assistance and guidance on preparing for the upcoming compliance requirements, please contact IncubEx via email at london@theincubex.com.

Source: UNCTAD