In 2024, European Emissions Trading System (EU ETS) expanded its sectoral scope to include maritime sector amongst the covered sectors. Currently, it has a threshold to reduce greenhouse gas emissions from ships of 5,000 gross tonnage and above, covering intra-EU voyages and half of the emissions from international voyages to and from EU ports. This phased implementation, starting in 2024 and fully effective by 2027, requires shipping companies to monitor, report, and verify their emissions, and acquire EU emission allowances (EUAs) accordingly. This regulatory change incentivizes cleaner technologies and operational practices, aligning with the EU’s climate neutrality goals by 2050, but also presents compliance and market-related challenges for the industry.
This analyst note delves into the specifics of the inclusion of the EU maritime sector in the European Emission Trading System (ETS). Key aspects include the regulatory landscape, abatement options and an outlook for EUA prices. We assess various abatement options available to the sector, evaluating their feasibility, cost-effectiveness, and potential impact on reducing emissions and accordingly, the cost of European Union Allowances in the long run based on cCarbon’s EU ETS forecast model.