EU ETS SHIPPING

Maritime transport emissions to be included in the EU Emissions Trading System (ETS) from 2024 and the UK ETS from 2026.

Is your fleet required to comply with the EU ETS?

In line with the EU’s climate ambitions, the scope of the ETS will be extended to cover CO2 emissions from ships over 5,000 gross tonnes in 2024. The phase-in will include emissions from ships calling at EEA ports for voyages within the EU (intra-EU) as well as 50% of the emissions from voyages starting or ending outside of the EU (extra-EU voyages). Carbon emissions while berthing in EEA ports will also be in scope.

We have 20 years of experience in successfully managing our clients’ carbon exposure

The UK ETS Authority has also confirmed that domestic maritime transport voyages between UK ports will come into scope from 2026. More details are expected in 2024.

Risk Management

Carlton Carbon is committed to providing the maritime transport sector with the necessary information, guidance, and support it needs to prepare for inclusion in carbon ETS markets. Whether you are a shipowner, charterer, manager or service provider, we have the experience and market knowledge required to help you manage your carbon position confidently.

  • Originally established in 2005, it is the EU’s flagship tool in the race to meet its net zero goals and combat climate change, targeting a 62% cut in CO2 emissions by 2030 compared with 2005 levels.

    The objective is to reduce greenhouse gas (GHG) emissions by limiting the amount of CO2e certain sectors of the economy can produce. By putting a price on CO2 and gradually reducing the supply of allowances, it aims to incentivise the transition to low-carbon, clean technologies.

  • Emissions from shipping will be phased into scope of the ETS from Jan. 1, 2024.

    To ensure a smooth transition, shipping companies will only have to surrender allowances for a portion of their emissions during the initial phase-in period, reaching 100% after 3 years:

    • 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.

  • Across a three-year phase-in period between 2024-26, cargo and passenger vessels ≥ 5,000GT will be expected to purchase the equivalent number of EUAs for:

    • 100% of emissions on voyages and port calls within the EU/EEA (intra-EU).

    • 50% of the emissions on voyages starting or ending outside of the EU/EEA (extra-EU).

    • All emissions that occur when ships are at berth in EU ports.

  • EU ETS and MRV Regulations place compliance obligations on the ‘Shipping Company’, which is defined as being the shipowner, charterer, or manager that has assumed responsibility for the operation of the ship. The shipowner and manager/operator must agree on which entity is responsible for ETS obligations, and there must be contractual proof of this agreement and the associated terms.

  • Based on 2022 figures* an average vessel would have an annual emissions cost liability of:

    • €344,000 in 2024 (40%)

    • €603,000 in 2025 (70%)

    • €861,000 in 2025 (100%)

  • ETS fundamentals and macroeconomic factors drive considerable price volatility in carbon markets and the wider energy sector. By understanding these inputs, Carlton Carbon can help you manage and reduce your compliance costs. We offer market leading risk management, price analysis, and procurement services for emissions allowance trading in the UK and EU. With 20 years’ experience supporting clients across all sectors, we can provide a carbon strategy that mitigates risk, and provides you with all the necessary information required to confidently manage your carbon exposure.

*The average cost of one EU Allowance (EUA) in 2022 was €81.20. The average total verified emissions per vessel in 2022 was 10,600 tCO2.

FAQs