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Inclusion of shipping in the EU Emissions Trading Scheme (EU ETS)

Context & objectives

Today, emissions from maritime transport are higher than in 1990 and are expected to grow further. In order to be consistent with the increased level of climate ambition, the EC proposed to extend EU ETS to maritime transport, along with action agreed within IMO. Under the Paris agreement reducing maritime transport emissions is part of the EU economy-wide reduction commitment. Emissions from maritime transport are expected to grow by around 34% between 2015 and 2050 and would undermine reductions made by other sectors to combat climate change.

Consequently, as part of its Fit for 55 package, the European Commission proposed to amend the EU Emission Trading System DIrective (2003/87.EC) in order to include emissions from ships. To ensure a smooth transition, a "phase in" period is introduced during which shippsing companies would have to surrender allowances for a portion of their verification emissions, gradually rising from 20% in the first year to reach 100% in the fourth year.

Summary of key points

  1. One Member State Adminiration should be responsible for each shipping company.
  2. Shipping companies will have to report aggregated EU MRV emissions for their fleet ; verified aggregated emissions will have to be submitited to their responsible administering authority before 31 March each year.
  3. In accordance with the "polluter pays principle", shipping companies (or another entity duly appointed by them) will have to purchase and surrender EU carbon allowances before 30 April each year.
  4. The commission will consider possible alignement of the EU ETS for maritime transport if an equivalent regime is proposed by the IMO.

Required allowances for EU MRV emissions & transition period


The emissions for which allowances must be surrendered will be calculated based on the following rules :
 
  • 100% of CO2 emissions for voyages between EU ports.
  •  100% of CO2 emissions at berth in a port under the jurisdiction of a Member State.
  •  50% of CO2 emissions for extra – EU voyages. (to EU ports and from EU ports)
The inclusion of EU ETS would be implemented through a phase-ine period during which the quantity of emissions to surrender will gradually increase to reach 100% by the reported period 2026.
 
Phase-in for the surrendering of shipping emissions under the EU ETS
- 2023 : 20 % of verified emissions
- 2024 : 45 % of verified emissions

- 2025 : 70 % of verified emissions
- 2026 and onwards : 100 % of verified emissions


EU ETS applied to THETIS EU MRV data

The rules proposed by the EU in terms of required allowances have been applied to the yearly emissions reported for the years 2018; 2019, 2020 and available from EMSA THETIS MRV. The following conclusions have been reached regarding the quantity of EU Allowances (EUAs)required (assuming a surrendering rate of 100% of verified emissions) :
 
  • 2018 : 145 millions tCO2 emitted & 100 millions of EUAs required
  • 2019 : 147 millions tCO2 emitted & 105 millions of EUAs required
  • 2020 : 124 millions tO2 emitted & 85 millions of EUAs required
Applying the 20% of surrendering to the emissions of the year 2020, and using a price of EUA around 60 EUR (as of September 2021), the financial impact for the sector would be around 1 billion EUR.

Read more about the EU ETS
Read the proposal for amending Directive 2003/87/EC establishing a system for GHG trading
 
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