EU ETS (Emissions Trading System) for Shipping

What Is the EU ETS for Shipping?

The EU Emissions Trading System (ETS) is the European Union's carbon pricing mechanism, extended to cover maritime shipping, requiring shipping companies to buy and surrender carbon allowances covering a portion of the emissions from voyages involving EU ports.

How Does the EU ETS Work for Shipping?

Shipping companies must monitor and report emissions for voyages to, from, and within the EU, and purchase carbon allowances (permits to emit CO2) corresponding to a percentage of those emissions, phased in over several years. The cost of these allowances is generally passed through to shippers as an additional surcharge on freight rates.

Why the EU ETS Matters for Shippers

The EU ETS adds a new, carbon-price-linked cost component to ocean freight rates on EU-related routes, one that fluctuates with carbon market prices rather than fuel prices alone. Shippers moving cargo through EU ports should expect this surcharge to be a growing, and somewhat variable, line item in their freight cost structure.