As the world intensifies its efforts to combat climate change, the maritime industry finds itself at the forefront of a transformative shift. One of the most significant drivers of this change is the European Union’s Emissions Trading System (EU ETS). As the EU expands its ambitious climate policies, maritime transport is now required to participate in the EU ETS, marking a crucial step toward reducing global greenhouse gas emissions. Let’s take a closer look at the history and impact of the EU ETS and what the inclusion of maritime transport means for the industry.

Overview of the EU ETS: A Cornerstone of Climate Policy

The EU ETS, established in 2005, is one of the world’s largest and most impactful carbon markets. Operating on a “cap-and-trade” principle, it aims to reduce greenhouse gas emissions by setting a gradually decreasing cap on the total emissions allowed from covered industries. These sectors include energy, manufacturing, aviation, and, as of 2024, maritime transport.

The system works by issuing emissions allowances, which companies must purchase to cover their carbon output. As the cap tightens over time, the scarcity of allowances drives up their price, incentivizing companies to adopt cleaner technologies and reduce their emissions. The goal is to cut emissions by 62% by 2030, compared to 2005 levels, in line with the EU’s commitment to the Paris Agreement.

Inclusion of Maritime Transport: A Necessary Step for Decarbonization

The maritime sector is responsible for about 3% of the EU’s total CO2 emissions, a figure that highlights the sector’s role in global emissions. Recognizing this, the EU has expanded the scope of the EU ETS to include emissions from maritime transport starting in 2024. This expansion covers cargo and passenger ships of 5,000 gross tonnage and above, focusing on the need to curtail emissions from large vessels that contribute significantly to pollution.

The inclusion of maritime emissions aligns with the EU’s broader Monitoring, Reporting, and Verification (MRV) Regulation, which tracks shipping emissions. This move applies to 50% of emissions from voyages starting or ending outside the EU, and 100% of emissions from voyages between EU ports. Initially, the system will cover only CO2 emissions, but starting in 2026, methane (CH4) and nitrous oxide (N2O) will also be included due to their significant global warming potential.

Compliance Requirements: A Phased Approach for Maritime Operators

To ease the transition for shipping companies, the EU ETS adopts a phased compliance approach, gradually increasing the obligations over the next few years. This allows maritime operators time to adjust while encouraging early adoption of emissions reduction measures.

Here’s how the phased compliance will work:

• 2024: Shipping companies are required to surrender EU allowances (EUAs) covering 40% of their emissions for intra-EU voyages.
• 2025: The requirement increases to 70% of emissions for intra-EU voyages.
• 2026 and Beyond: Full compliance is mandatory, with companies needing to cover 100% of emissions from intra-EU voyages and 50% from voyages between the EU and non-EU ports.

For non-EU voyages, a more gradual obligation applies: 20% of emissions in 2024, 35% in 2025, and 50% from 2026 onward. Methane and nitrous oxide will also become regulated in 2026, reflecting their high global warming potential.

Shipping companies must purchase and surrender allowances for their emissions, and failure to comply will result in hefty fines. By September 2025, companies must submit their first set of allowances for 2024 emissions, with annual compliance deadlines thereafter. This phased approach gives companies time to plan, but also pressures them to adapt quickly to avoid financial penalties.

Navigating Compliance in a Changing Landscape

The inclusion of maritime transport in the EU ETS marks a new chapter in global efforts to decarbonize the shipping industry. Shipping companies must stay informed, agile, and proactive in managing their compliance obligations. With new rules and higher stakes, the maritime sector is entering an era where sustainability is not just a goal but a regulatory requirement.

As the compliance deadlines approach, it is critical for stakeholders to understand the evolving regulations and develop strategies to meet their emissions reduction targets. Whether through operational changes, fuel innovations like methanol, or the adoption of cleaner technologies, staying ahead of these changes will be key to navigating this new regulatory landscape.

The EU ETS will significantly impact the future of maritime transport. To better understand how these changes will affect your business and explore strategies for compliance, download our comprehensive whitepaper on maritime decarbonization and EU ETS compliance. Stay informed, stay prepared, and lead the way toward a sustainable maritime future.