The European Union extended the scope of the EU ETS to include the maritime sector in 2024. Broadly speaking, ships over 5000 GT, carrying goods or passengers, need to surrender allowances to cover 100% of emissions for intra-European voyages, and 50% of emissions for in/out-bound voyages to Europe. Further, to soften the introduction to the EU ETS, the compliance obligation is further reduced to 40% of 2024 emissions, extending to 70% for 2025, and full coverage from 2026 onwards.
A year ago, there was a palpable uncertainty in the maritime sector about how its inclusion into the EU ETS would play out. One year in, however, the noise has been relatively muted.
The obligation to monitor, verify and report greenhouse gas emissions to the EU has been in place for the maritime sector since 2018. Hence, the main tasks for shipping companies have therefore been to define the compliance entity, navigate through the administrative complexities, set up the appropriate accounts for purchasing and surrendering of allowances, and decide on a trading strategy.
Most companies seem to have integrated well into the EU ETS and have set up their respective holding and trading accounts. The real litmus test will come in September, when companies need to surrender their allowances for 2024 emissions. Misunderstandings or practical challenges might yet surface. Some 12,700 ships have reported EU ETS emissions into the MRV registry for 2023. Once the 2024 verified emissions are published, we will know how many vessels that are currently under the scheme. Shipping companies responsible for all these ships differ greatly in size and the resources they can allocate to handle their EU ETS compliance.
As of 31 March 2025, companies must submit a verified emissions report to the European Commission and the flag state. The Commission will unveil the 2024 numbers for shipping on 1st April.
Emissions from the maritime sector in Europe rose in 2021 and 2022, almost reaching pre-pandemic levels. Emissions then decreased in 2023, on the back of bleaker macroeconomics and lower coal imports in reaction to increasing renewable power generation in Europe. The trend of lower coal imports is expected to continue, and major ports reported less throughput of dry bulk in 2024.
Still, Veyt expects emissions to increase in 2024 compared to 2023, as most container ships and tankers from Asia have diverted ships and extending voyages around the Cape of Good Hope to avoid Houthi attacks in the Red Sea. Veyt expects maritime emissions in the EU ETS scope to reach 84.7 million tonnes of CO2, up 1.5 Mt or 1.8 % from 2023. Since the sector will have to surrender allowances for 40% of emissions in 2024, shipping companies thus will have to surrender 33.9 million EUAs for 2024 emissions.
Figure 1 shows how we estimate emissions within the EU ETS scope will develop for 2023, 2024 and 2025. Please note that 2023 is prior to the inclusion of the maritime sector in the EU ETS, and the sector will not have to surrender any allowances for these emissions. Container/Ro-ro, passenger ships and tankers constitute more than three quarters of maritime emissions (Figure 1).
We expect EU ETS shipping emissions to be 82.4 million tons of CO2 in 2025, a 2.7% reduction compared to 2024 (figure 1). Three reasons for this development;
While the administrative burden was implemented from the outset, the financial impact on shipping companies remained relatively limited in 2024. The EUA price averaged EUR 66.5/t in 2024, decreasing significantly from the record EUR 100/t levels mid-2023. Importantly, with shipping only surrendering allowances for 40% of their emissions, the EU ETS compliance cost probably have not changed sailing patterns significantly.
Analysing the financial impacts, assuming a price of EUR 500/t of bunker fuel (VLSFO) in 2024, the cost of carbon adds around 14 % to the bunker cost on intra-EU voyages, and 7% on in/out-bound voyages. Depending on sailing patterns, the detour around Africa adding weeks of sailing for ships avoiding the Suez channel represented a far more significant economic challenge for many shipping companies.
In 2025 coverage increase to 70% of shipping emissions in the EU ETS scope. If we assume the same bunker fuel price for 2025 as for 2024 and use Veyt’s EUA price forecast of EUR 95/t for 2025, the cost of carbon will put another 35 % to the bunker cost on intra EU voyages, and 17% on in/out-bound voyages.
2025 is a pivotal year for global shipping as the International Maritime Organization (IMO) plans to adopt measures both for a fuel standard that gradually improve the greenhouse gas intensity of marine fuels, and an economic measure to put a price on carbon emissions. The regulatory measures that have been prepared for a possible adoption in 2025 stem from the IMO’s revised GHG reduction strategy in 2023. The strategy sets a goal of 40% reduction in greenhouse gas intensity in 2030.
Shipping has traditionally been seen as a laggard on international climate work and emissions from international shipping are not included in the Paris Agreement. While uncertain, should the member states of the IMO come to an agreement on a market-based mechanism, shipping could be the first sector covered by a global carbon price.
Veyt specialises in data, analysis, and insights for all significant low-carbon markets and renewable energy.
