EU ETS for Shipping from 2024
The European Union Emissions Trading System (EU ETS) was extended to maritime transport from 1 January 2024, creating a carbon-pricing and emissions-allowance framework for shipping companies operating vessels within the applicable maritime scope.
The maritime EU ETS operates alongside the EU Monitoring, Reporting and Verification framework for maritime transport. The MRV system provides the emissions data and verification foundation, while the EU ETS introduces the additional obligation to surrender emission allowances for emissions covered by the system.
The maritime ETS is flag-neutral. The applicable obligations depend primarily on the type and size of the ship and the voyages and port activities falling within the geographical scope of the EU ETS.
For shipping companies, compliance therefore requires reliable emissions monitoring, appropriate documentation, verified emissions data, effective communication with the administering authority, and timely management of the required EU ETS allowances.
Scope of the EU ETS for Maritime Transport
The maritime EU ETS initially applies to cargo and passenger ships of 5,000 gross tonnage (GT) and above falling within the applicable scope.
From 2027, offshore ships of 5,000 GT and above are also scheduled to enter the EU ETS maritime scope. The European Commission's current framework also distinguishes the broader ship coverage under EU MRV from the narrower ETS scope.
Cargo Ships
Cargo ships of 5,000 GT and above are within the maritime EU ETS scope from 2024 when performing activities covered by the system.
Passenger Ships
Passenger ships of 5,000 GT and above are within the maritime EU ETS scope from 2024 when performing activities covered by the system.
Offshore Ships
Offshore ships of 5,000 GT and above are scheduled to enter the EU ETS scope from 2027 under the applicable EU framework.
Flag-Neutral Application
The maritime EU ETS applies according to the applicable activity and voyage criteria rather than being limited to ships flying an EU Member State flag.
The EU MRV maritime framework has a broader scope than the EU ETS. From 2025, EU MRV reporting also covers certain offshore ships and general cargo ships from 400 GT, but this does not automatically mean that all such vessels are subject to the EU ETS allowance surrender obligation.
1. Geographical Scope of EU ETS Maritime Emissions
The EU ETS maritime system uses a route-based geographical approach. The percentage of emissions subject to the system depends on where the voyage starts and ends and on emissions occurring while the ship is within an EU port.
For voyages between two EU ports, the applicable ETS scope is generally 100% of emissions. For voyages between an EU port and a port outside the EU, the applicable scope is generally 50% of emissions.
Emissions occurring while a ship is within an EU port are generally covered at 100%, including relevant emissions at berth and during movements within the port.
Geographical Application
- 100% of emissions for voyages between EU ports
- 50% of emissions for voyages between an EU port and a non-EU port
- 100% of applicable emissions occurring within an EU port
- Application is generally flag-neutral
- Voyage and port records should support the calculation of emissions within the applicable ETS scope
2. Greenhouse Gases Covered by the Maritime EU ETS
The maritime EU ETS initially covered carbon dioxide (CO2) emissions from 2024.
From 2026, the maritime EU ETS also covers methane (CH4) and nitrous oxide (N2O), in accordance with the expanded greenhouse-gas framework applying to maritime transport.
CO2
Carbon dioxide has been within the maritime EU ETS scope since the system began applying to shipping in 2024.
CH4
Methane enters the maritime EU ETS greenhouse-gas scope from 2026 and is therefore relevant to emissions calculations from the 2026 reporting period.
N2O
Nitrous oxide also enters the maritime EU ETS greenhouse-gas scope from 2026 and must be addressed in applicable emissions monitoring and reporting arrangements.
CO2 Equivalent
Applicable non-CO2 greenhouse-gas emissions are incorporated into the emissions framework using the relevant carbon-dioxide-equivalent methodology.
3. EU ETS Allowance Surrender Phase-In
The obligation for shipping companies to surrender EU ETS allowances was introduced through a phased approach rather than requiring full surrender from the first year of maritime participation.
For emissions reported for 2024, shipping companies were required to surrender allowances corresponding to 40% of the applicable verified emissions.
For emissions reported for 2025, the surrender requirement increased to 70%.
For emissions from 2026 onward, the applicable framework reaches 100% of the relevant reported emissions.
2024 Emissions
40% of the applicable verified emissions were subject to allowance surrender during the first phase of the maritime EU ETS.
2025 Emissions
70% of the applicable verified emissions are subject to allowance surrender under the second phase of the implementation.
2026 Emissions
The maritime EU ETS reaches the 100% allowance-surrender level for emissions from the 2026 reporting year.
2027 and Later
The full surrender framework continues for applicable maritime emissions subject to the EU ETS and any subsequent legislative amendments.
4. EU ETS Monitoring, Reporting & Verification
Effective EU ETS compliance depends on accurate monitoring, reporting, and verification of the emissions data used to determine the company's allowance surrender obligation.
The maritime EU ETS builds on the established EU MRV framework. Shipping companies must maintain monitoring arrangements capable of producing reliable and traceable emissions information for the applicable ships and activities.
The monitoring plan and related documentation should reflect the company's actual operations, fuel consumption arrangements, emissions calculation methodology, voyage data, and other information required under the applicable regulations.
Monitoring Plan
The applicable monitoring plan establishes how relevant emissions and supporting data are monitored, calculated, recorded, and controlled.
Emissions Data
Fuel consumption, fuel characteristics, voyage information, port activity, and other relevant operational data should be consistent and traceable.
Verification
Applicable emissions data is subject to verification under the EU maritime monitoring, reporting, and verification framework by the appropriate accredited verifier.
Reporting
Verified emissions information must be reported through the applicable regulatory arrangements within the required deadlines.
5. Shipping Company & Administering Authority
EU ETS maritime compliance places responsibilities on the shipping company responsible for the applicable ships and activities.
Each shipping company subject to the EU ETS is assigned to an administering authority of an EU Member State in accordance with the applicable regulatory framework.
Companies should therefore maintain clear records concerning the identity of the responsible shipping company, ship management arrangements, company changes, administering authority, monitoring-plan status, verifier arrangements, and relevant emissions reporting responsibilities.
Compliance Management Areas
- Identification of the responsible shipping company
- Confirmation of the applicable administering authority
- Monitoring-plan preparation and maintenance
- Verifier coordination
- Annual emissions reporting
- Union Registry and account management where applicable
- Allowance procurement and surrender planning
- Record keeping and compliance evidence
6. EU ETS Allowances & Surrender Obligations
An EU Allowance (EUA) represents the right to emit one tonne of carbon-dioxide equivalent within the applicable EU ETS framework.
For shipping companies, the number of allowances required depends on the verified emissions falling within the maritime EU ETS scope and the applicable surrender percentage for the reporting year.
Allowance management should therefore be integrated with the company's emissions monitoring and financial planning rather than treated as an isolated administrative activity.
Emissions Forecasting
Companies should estimate future ETS exposure using expected fuel consumption, voyage patterns, port calls, vessel deployment, and applicable emissions factors.
Allowance Planning
Allowance requirements should be assessed against verified emissions and the applicable annual surrender percentage.
Cost Management
EU ETS exposure can become a significant operational and financial consideration and should be incorporated into voyage and fleet-management planning.
Surrender Readiness
Companies should maintain sufficient allowance-management procedures to complete the required surrender within the applicable regulatory deadline.
7. EU ETS Compliance Deadlines
EU ETS maritime compliance follows an annual cycle involving emissions monitoring, data verification, reporting, and allowance surrender.
Shipping companies should not wait until the allowance-surrender deadline to identify problems in their emissions data. Fuel records, voyage data, monitoring arrangements, and supporting documentation should be reviewed continuously during the reporting year.
Annual Compliance Cycle
- Monitor applicable fuel consumption and emissions throughout the year
- Maintain accurate voyage and port information
- Maintain and update the applicable monitoring arrangements
- Reconcile operational data and supporting records
- Submit the required emissions information for verification
- Complete verified emissions reporting within the applicable deadline
- Arrange the required EU ETS allowances
- Complete allowance surrender by the applicable deadline
Under the current EU framework, verified annual emissions reporting and allowance surrender operate on different deadlines. Shipping companies should therefore maintain a compliance calendar covering both activities and the supporting verification process.
8. Fuel Consumption & Emissions Data Quality
The accuracy of EU ETS compliance depends heavily on the quality of the underlying shipboard data.
Fuel consumption records should be traceable to reliable measurements and supporting documentation. Differences between bunker delivery notes, fuel measurement systems, noon reports, engine data, voyage records, and other operational records can create discrepancies that require investigation before emissions reporting is finalized.
Bunker Delivery Notes
Bunker delivery documentation should be retained and reconciled with the fuel quantities used in the emissions calculation.
Fuel Measurement
Fuel measurement systems and relevant measurement procedures should be controlled and supported by appropriate records.
Voyage Records
Port calls, voyage routes, departure and arrival locations, and time within applicable ports should be accurately recorded.
Data Reconciliation
Operational records should be periodically reconciled so discrepancies can be identified and corrected before annual verification.
9. EU ETS & EU MRV Relationship
The EU ETS and EU MRV are related but separate regulatory frameworks.
EU MRV establishes the monitoring, reporting, and verification framework for maritime greenhouse gas emissions and provides the emissions data foundation used for EU maritime climate regulation.
The EU ETS adds the market-based obligation to surrender emission allowances for applicable emissions.
EU MRV
Establishes monitoring, reporting, and verification requirements for maritime greenhouse gas emissions within its applicable scope.
EU ETS
Creates the obligation for applicable shipping companies to surrender emission allowances for emissions covered by the maritime EU ETS.
A ship can therefore fall within the EU MRV framework without necessarily being subject to the same EU ETS allowance-surrender obligation. Companies should assess the scope of each framework separately.
10. EU ETS Compliance for Alternative Fuels
Fuel selection is increasingly important for shipping companies because fuel type and emissions characteristics can influence the company's EU ETS exposure.
Alternative and renewable fuels may be subject to specific sustainability, emissions-calculation, and zero-rating conditions under the applicable EU legislation. Companies should therefore ensure that the fuel documentation and sustainability evidence required for the applicable treatment are properly maintained.
Areas Requiring Technical Attention
- Fuel type and composition
- Applicable emissions factors
- Fuel consumption measurement
- Sustainability documentation where applicable
- Renewable fuel certification where applicable
- Fuel supply documentation
- Calculation methodology
- Verification evidence
11. Preparing a Vessel or Fleet for EU ETS Compliance
EU ETS compliance should be managed as an ongoing fleet and technical-management process. Early preparation allows companies to identify data-quality issues, monitoring gaps, documentation deficiencies, and potential allowance exposure before the annual verification and surrender stages.
Identify Applicable Ships
Confirm which ships fall within the EU ETS scope based on ship type, gross tonnage, operational activity, and the applicable regulatory period.
Review Monitoring Plans
Confirm that the applicable monitoring arrangements accurately reflect the vessel's actual fuel, voyage, emissions, and operational data.
Check Data Quality
Reconcile fuel consumption, bunker documentation, voyage information, port activity, and emissions calculations.
Prepare for Verification
Organize the records and supporting evidence required for review by the applicable accredited verifier.
Recommended Compliance Checklist
- Confirm vessel type and gross tonnage
- Identify EU ETS voyages and port activities
- Confirm the responsible shipping company
- Confirm the administering authority
- Review the applicable monitoring plan
- Review fuel consumption measurement arrangements
- Reconcile bunker delivery notes and fuel records
- Review voyage and port-call records
- Check CO2, CH4, and N2O data where applicable
- Review emissions calculation methodology
- Prepare documentation for verification
- Forecast EU ETS allowance requirements
- Maintain an annual reporting and surrender calendar
12. EU ETS Compliance & Technical Management
EU ETS compliance is not solely a financial or administrative issue. The accuracy of the company's emissions position depends on technical and operational information generated by the vessel throughout the year.
Fuel measurement systems, engine operation, auxiliary machinery, voyage planning, port operations, fuel quality, bunker documentation, and onboard data-management procedures can all influence the quality of the emissions information used for compliance.
Technical managers should therefore integrate EU ETS requirements into existing environmental, operational, maintenance, and compliance-management systems rather than treating emissions data as a separate reporting exercise.
Independent Marine Surveying & Technical Consultancy
PAMS Pacific Admiralty Maritime Services provides independent marine surveying and technical consultancy support for shipowners, operators, technical managers, offshore projects, and other maritime stakeholders.
Technical services may include marine surveys, technical inspections, vessel condition assessments, regulatory compliance reviews, environmental vessel audits, offshore engineering consultancy, FPSO/SPM technical support, and audit preparation.
PAMS can support clients with compliance-focused technical assessments relating to vessel operations, emissions data readiness, technical documentation, environmental compliance, survey preparation, and verification readiness.
Statutory verification, EU ETS administration, allowance issuance, and regulatory approval remain the responsibility of the applicable competent authority, administering authority, or accredited verifier.
Frequently Asked Questions
What is the EU ETS for shipping?
The EU Emissions Trading System (EU ETS) is a market-based greenhouse-gas emissions framework that has applied to maritime transport since 1 January 2024. Applicable shipping companies must surrender emission allowances for emissions falling within the maritime EU ETS scope.
Which ships are currently covered by the EU ETS?
Since 2024, the maritime EU ETS applies to cargo and passenger ships of 5,000 GT and above performing activities within its applicable scope. From 2027, offshore ships of 5,000 GT and above are scheduled to enter the maritime EU ETS scope.
Does the EU ETS apply to non-EU flag ships?
Yes. The maritime EU ETS is generally flag-neutral. A vessel does not have to fly an EU Member State flag to be subject to the applicable EU ETS requirements when it performs activities falling within the system's scope.
How much of a voyage is covered by the EU ETS?
Generally, 100% of applicable emissions are covered for voyages between EU ports and for applicable emissions occurring within EU ports. For voyages between an EU port and a non-EU port, generally 50% of the applicable voyage emissions are covered.
Which greenhouse gases are covered by the maritime EU ETS?
Carbon dioxide (CO2) has been covered since 2024. Methane (CH4) and nitrous oxide (N2O) enter the maritime EU ETS greenhouse-gas scope from 2026.
What is the EU ETS allowance surrender phase-in?
The maritime EU ETS introduced a phased surrender requirement. The surrender level was 40% for applicable 2024 emissions, increased to 70% for applicable 2025 emissions, and reaches 100% for applicable emissions from 2026 onward.
Is EU ETS the same as EU MRV?
No. EU MRV and EU ETS are related but separate regulatory frameworks. EU MRV establishes monitoring, reporting, and verification requirements for maritime emissions, while the EU ETS creates the additional obligation to surrender emission allowances for applicable emissions.
What data is important for EU ETS compliance?
Relevant information can include fuel consumption, fuel type, bunker delivery documentation, fuel measurement records, voyage data, port calls, time and activity within ports, applicable emissions factors, greenhouse-gas calculations, monitoring-plan information, and supporting verification records.
Who verifies EU ETS maritime emissions?
Applicable maritime emissions data is subject to verification under the EU maritime MRV framework by an appropriate accredited verifier. PAMS Pacific Admiralty Maritime Services provides independent technical consultancy and compliance preparation support but does not represent itself as an EU ETS statutory verifier unless separately accredited and appointed for that function.
When must shipping companies surrender EU ETS allowances?
The EU maritime ETS operates on an annual compliance cycle. Verified emissions reporting and allowance surrender have separate regulatory deadlines. Companies should maintain an annual compliance calendar and ensure that sufficient allowances are available for the applicable surrender obligation.
Does the EU ETS apply to emissions while a vessel is in port?
Yes. Applicable emissions occurring while a vessel is within a port under the jurisdiction of an EU Member State are generally covered at 100% under the maritime EU ETS framework.
Can PAMS support EU ETS technical compliance preparation?
Yes. PAMS Pacific Admiralty Maritime Services can provide independent marine technical consultancy, technical documentation review, emissions-data readiness assessment, environmental compliance support, technical inspections, audit preparation, and verification-readiness support for applicable maritime operations.
PAMS Pacific Admiralty Maritime Services
PAMS Pacific Admiralty Maritime Services is an independent marine technical consultancy specializing in marine surveying, marine technical consultancy, offshore engineering consultancy, FPSO engineering support, marine audits, technical inspections, and maritime regulatory compliance.
Technical compliance services include vessel condition assessments, environmental vessel audits, technical inspections, statutory and class survey preparation, maritime regulatory compliance support, offshore technical assessments, and engineering consultancy.
Based in Manila, Philippines — operating as an independent technical consultancy serving Philippine and international maritime requirements.
Need EU ETS Shipping Compliance Support?
PAMS Pacific Admiralty Maritime Services provides independent marine surveying and technical consultancy support for shipowners, operators, technical managers, and maritime projects requiring emissions-data, environmental compliance, technical documentation, and verification-readiness support.