Are you ready for EU-ETS?

The EU ETS is an emission cap-and-trade system that aims to reduce greenhouse gas (GHG) emissions by setting a limit, or cap, on GHG emissions for certain sectors of the economy, including shipping.

From 2024 the EU ETS will include ships 5000 GT and above transporting cargo or passengers for commercial purposes. The EU MRV system will be extended from 2025 to apply to offshore ships above 400 GT and general cargo ships between 400 and 5000 GT transporting cargo for commercial purposes. Offshore ships 5000 GT and above will, from 2027, be included in the ETS.

From 2024 all ships traveling to and from European ports, of all flags, regardless of their port of origin, will be subject to ETS obligations, where voyages are within the EU/EEA, 100% of emissions are subject to the EU ETS.  Where voyages start or end in the EU, 50% of emissions are subject to the EU ETS.

Shipping companies must open an account in the Union ETS Registry for purchasing of EU Allowances (EUAs). They must comply with the reporting requirements via the Thetis platform, establish a partnership with an accredited Verifier, and submit the documentation to the Administering Authority that they have been assigned for final approval. Shipping companies must surrender (use) their first ETS allowances by 30 September 2025 for emissions reported in 2024.

The share of emissions that must be covered by allowances gradually increases each year:

• 2025: 40% of emissions reported for 2024 must be covered by emission allowances
• 2026: 70% of emissions reported for 2025
• 2027 and beyond: 100% of reported emissions
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Failure to comply to surrender the required number of EUAs will result in a financial penalty of EUR100 per EUA, as well as the cost of acquiring additional EUAs to make up the deficit.

Shipping operators who do not comply and surrender the required number of EUAs on any vessel for more than two years could risk a fleet-wide trading ban in the EU.

Wallem Group can partner with clients to ensure compliance with EU ETS Directive requirements. Download our whitepaper: A Guide to Navigating the EU ETS.