The shipping sector
From January 2024, the shipping sector will gradually be included in the EU Emissions Trading System (EU ETS). The sector will be fully included in the system by 2026.
The amended EU ETS directive, adopted in 2023, will contribute to delivering on the EU’s climate targets for 2030 and 2050 by increasing the use of renewable and low-carbon fuels in maritime transport. Initially, larger ships over 5,000 gross tonnages and above are covered for the period 2024-2026. From 2027, the limit will be lowered to ships of 400 gross tonnages.
The system covers:
- 100 per cent of emissions that occur between two EU ports and when ships are within EU ports.
- 50 per cent of emissions from voyages starting or ending outside of the EU.
Incorporation of the shipping sector
Starting from January 2024, shipping companies are obligated to report their verified emissions to the Swedish Environmental Protection Agency. The monitoring plans and emissions reports shall be submitted through THETIS-MRV.
Shipping companies that are registered in Sweden or has Sweden as administrating EU Member State must have a compliance account. Shipping companies are required to open a maritime operator holding account in the Union Registry to report and surrender emission allowances.
In order to surrender emission allowances shipping companies will need to acquire general EU allowances (EUA). EUA are the same ones used by industry, power sector and aircraft operators. EUA are available for purchase on the European Energy Exchange (EEX). The EU has currently contracted with EEX, covering its 27 Member States. Additionally, allowances can be traded among all companies that have accounts in the Union Registry.
Furthermore, the entity responsible for compliance with the ETS obligations shall also be responsible for compliance with MRV obligations, according to the MRV Regulation (EU) 2023/957.
Scope
Once emissions data have been verified by the administering authority, companies must surrender the equivalent number of allowances in the Union Registry. For shipping companies, the first surrender occurs by September 30, 2025, for the emissions reported in 2024. During an initial phase-in period, shipping companies will only have to surrender allowances in the Union Registry for a portion of their emissions.
- In 2025, shipping companies will be required to surrender allowances for 40 per cent of their emissions reported in 2024.
- In 2026, shipping companies will be required to surrender allowances for 70 per cent of their emissions reported in 2025.
- From 2027 and beyond, shipping companies will be required to surrender allowances for 100 per cent of their reported emissions.
From 2005, MRV obligations applies to offshore ships of or above 5000 gross tonnage (GT), and EU ETS obligations applies to offshore ships of or above 5000 GT from 2027.
From 2024, the EU ETS will only cover carbon dioxide (CO2) emissions. By January 2026, the system will also cover methane (CH4) and nitrous oxide (N2O) emissions.
Both MRV and EU ETS exemptions include warships, naval auxiliaries, fish-catching or fish-processing ships, wooden ships of a primitive build, ships not propelled by mechanical means, and government ships used for non-commercial purposes.
Information for maritime operators
From January 2024, it will be possible to open a maritime operator holding account in the Union Registry. There will be no free allocation of emissions rights within the shipping sector.
Information about opening a maritime operator holding account in the Union Registry will be sent to affected maritime operators by the Swedish Energy Agency.
