The European Union Council and Parliament have reached a provisional deal to include shipping in the EU emissions trading system (EU-ETS).
The Parliament and then the Council must adopt the pieces of legislation prior to them entering into force. This agreement will see amendments made to Directive 2003/87/EC, which was the Directive that established a system for greenhouse gas emission allowance trading within the EU. NorthStandard highlighting the following:
The greenhouse gases covered by the EU-MRV are:
- From 2023, carbon dioxide (CO2)
- From 2024, carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O).
The greenhouse gases covered by the EU-ETS are:
- From 2024, carbon dioxide (CO2)
- From 2026, carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O).
Applicable vessels
Upon entry into force, the EU-ETS will apply to ships of 5,000 gross tonnage and above. From 1 January 2025, the EU-MRV will also apply to:
- general cargo ships of 400 gross tonnage and above
- offshore vessels of 400 gross tonnage and above
- Whether these vessels will be included in the EU-ETS down the line will be reviewed by the EU Commission in 2026.
Scope of application to maritime transport activities
The allocation of allowances and the application of surrender requirements will apply to voyages as follows:
- 50% of the emissions from ships performing voyages departing from an EU port and arriving at a non-EU port
- 50% of the emissions from ships performing voyages arriving at an EU port from a non-EU port
- 100% emissions from ships performing voyages between EU ports
- 100% of emissions from ships at berth in an EU port
If by 2028, the IMO does not adopt a global market-based measure to reduce greenhouse gas emissions from maritime transport in line with the objectives of the Paris Agreement and at least to a level comparable to the EU-ETS, the EU will consider increasing the 50% requirement for extra-EU voyages.
Phase-in of requirements for maritime transport:
Shipping companies shall be liable to surrender allowances according to the following schedule:
- 40% of verified emissions reported for 2024
- 70% of verified emissions reported for 2025
- 100% of verified emissions reported for 2026 and each year thereafter
Surrender of allowances
By 30 September each year, the shipping company must surrender the required number of allowances in respect of its emissions for the preceding calendar year.
Exceptions
Up until 31 December 2030, EU Member States can request exemption in relation to:
- voyages performed by passenger ships (other than cruise passenger ships) and by ro-pax ships, between a port of an island with no road or rail link with the mainland and a port under the jurisdiction of that same Member State and from the activities within a port from those ships in relation to those voyages. The island shall have a permanent population of less than 200,000 permanent residents according to the latest best data available in 2022. The Commission shall publish a list of islands and the concerned ports and keep that list up to date.
- voyages by passenger or ro-pax ships performed in the framework of a transnational public service contract or a transnational public service obligation connecting the two requesting Member States and from the activities within a port from those ships in relation to those voyages.
