With thanks to ECSA, please find the following information from the ICS with respect to the agreement reached on 29 November by the EU institutions (EU 27 Member States, European Parliament and European Commission) on the inclusion of international shipping in the EU emissions trading system (ETS).

This agreement on shipping will be subject to an overall agreement for all ETS sectors, which is expected to be achieved in the final EU “trialogue” meeting on 15-16 December.

The main elements of this provisional agreement are the following:

Use of the EU ETS revenues

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  Mandatory dedicated calls for maritime under the Innovation Fund.

  
  


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  Earmarking of at least 20 million ETS allowances for maritime under the ETS

  
  

  Innovation Fund up to 2030.

  
  


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  Under the current prices, 20 million allowances correspond to around 1.5 billion

  
  

  Euro.

  
  


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  This number is not a ceiling and the sector can claim back more revenues. Maritime

  
  

  is the only ETS sector with earmarked revenues under an ETS Fund.

  
  


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  The list of projects eligible for financing will include the improvement of the energy

  
  

  efficiency of (EU) ships and ports, innovative technologies and infrastructure, as well as the deployment of sustainable alternative fuels and zero-emission propulsion technologies.

  
  


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  The territoriality requirement in maritime calls is removed. For maritime activities, projects with clear EU added value will be eligible

  
  

   States will also be encouraged to use national revenues to protect marine biodiversity.

  
  

  Phase-in period

  
  

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  40 % of verified emissions reported for 2024 will be surrendered in 2025;

  
  


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  70 % of verified emissions reported for 2025 will be surrendered in 2026;

  
  


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  100 % of verified emissions reported for 2026 will be surrendered in 2027.

  
  

  Scope

  
  


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  Vessels of more than 5,000 GT in their voyages for transporting, for commercial

  
  

  purposes, cargo or passengers will be covered.

  
  


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  From 2025, general cargo ships and offshore vessels between 400 GT and 5,000

  
  

  GT will be covered by the EU MRV. By end of 2026, the Commission will present a

  
  

  report on the possibility to include them in the EU ETS.

  
  


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  From 2025, offshore vessels of more than 5,000 GT will be covered by the EU

  
  

  MRV. From 2027, they will be covered by the EU ETS.

  
  


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  In addition to carbon dioxide, methane and nitrous oxide will be covered by the

  
  

  EU MRV from 2024 and by the EU ETS from 2026.

  
  


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  The geographical scope remains unchanged (100% on intra-EU voyages and 50%

  
  

  of voyages from/to the EU).

  
  

  Note from ICS: based on the current EU carbon price of 80 Euros per tonne of CO2, all ships on international voyages, including non-EU flag ships calling at EU ports, would initially pay about 50 Euros per tonne of fuel consumed (40% of 50% of 80 Euros x carbon factor of 3.2), although this figure would then progressively increase. Under the EU ETS however, the cost of carbon allowances is volatile and variable as it is determined by the market (unlike the flat rate contribution system proposed by ICS for use within a global economic measure at IMO).

  
  

  Commercial operator clause

  
  

• Mandatory pass-through of the ETS costs to commercial operators: shipowners will be entitled to get compensated.

IMO measure

Within 18 months after the adoption of an IMO measure and before it becomes operational, the Commission will present a report examining the economic measure and the “coherence” between the EU ETS and the IMO measure.

Simon Bennett
Deputy Secretary General