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The EU Emissions Trading System (EU ETS) is the European Union’s carbon pricing mechanism, and from 2024 it includes maritime transport. It places a cost on greenhouse gas emissions from ships by requiring companies to monitor emissions (under EU MRV) and surrender tradable emission allowances.
For shipping, EU ETS represents a shift from pure reporting to direct financial exposure to carbon emissions, making emissions performance a commercial factor in voyage planning, chartering, and fuel strategy.
Under EU ETS, shipping companies must purchase and surrender EU Allowances (EUAs) corresponding to a share of their verified greenhouse gas emissions. These allowances are traded on the carbon market, meaning the cost of compliance fluctuates with EUA prices.
The system follows a “cap-and-trade” model at EU level (with an overall emissions cap for covered sectors), but for individual voyages or ships there is a financial liability, with no fixed limit tied to emissions.
Geographical coverage:
All EU Member States plus EEA countries (Norway, Iceland, Liechtenstein).
Ship size threshold:
Applies to ships of 5,000 gross tonnage (GT) and above.
Voyage coverage:
EU ETS covers emissions from:
· 100% of emissions on voyages between two EU/EEA ports
· 100% of emissions while at berth in an EU/EEA port
· 50% of emissions on voyages between an EU/EEA port and a non-EU/EEA port
This makes EU ETS relevant not only for intra-European trade, but also for deep-sea voyages with an EU connection.
What counts as a “port of call” ?
A port of call is where a ship stops to load/unload cargo, embark/disembark passengers, or (for offshore ships) relieve crew. Several stop types do not count (e.g., refuelling-only, taking supplies, repair/dry-dock, distress/assistance, shelter from weather, certain ship-to-ship transfers, and specific container transhipment port situations).
Greenhouse gases covered:
· CO₂ – covered from 2024
· CH₄ (methane) – covered from 2026
· N₂O (nitrous oxide) – covered from 2026
This broadens the impact beyond fuel consumption alone, especially for LNG-fueled vessels where methane slip becomes commercially relevant.
Exemptions:
The following vessel types are excluded:
· Warships and naval auxiliaries
· Fishing vessels
· Government ships used for non-commercial purposes
Most commercial cargo and passenger vessels above the size threshold are therefore in scope.
Shipping is gradually phased into full financial exposure:
· 2024: Companies must surrender allowances for 40% of verified emissions
· 2025: 70% of verified emissions
· From 2026 onwards: 100% of verified emissions
The phase-in reduces short-term shock but clearly signals full carbon pricing in the near term.
