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Introduction of the EU ETS (Emission Trading System) in the Maritime Industry

By
JAS Sustainability Team
September 18, 2023
Including maritime emissions in the EU Emissions Trading System marks a significant shift for the maritime logistics industry.
Including maritime emissions in the EU Emissions Trading System marks a significant shift for the maritime logistics industry.

As part of ongoing efforts to combat climate change, the European Union (EU) has extended the Emissions Trading System (ETS) to include CO2 emissions from all large ships entering EU ports. Starting in January 2024, this move will hold shipping companies accountable for their carbon footprint, fostering energy efficiency and incentivizing low-carbon solutions within the maritime logistics industry.

Inclusion of Maritime Emissions in the EU ETS:

In May 2023, the EU officially adopted amendments to the ETS Directive and the Regulation on the Monitoring, Reporting, and Verification (MRV) for maritime transport. These amendments will integrate maritime emissions into the ETS, encompassing 50% of emissions from voyages starting or ending outside the EU and 100% of emissions between two EU ports or when ships are within EU ports. This step will apply to all large ships of 5,000 gross tonnage and above, irrespective of their flag.

Transition Period and Compliance:

To facilitate a smooth transition, shipping companies will gradually be required to surrender emission allowances for a portion of their reported emissions:

  • In 2025, they have to surrender allowances for 40% of their emissions reported in 2024.
  • In 2026, the percentage will increase to 70% for emissions reported in 2025.
  • From 2027 onwards, they must surrender allowances for 100% of their reported emissions.

Impact on the Maritime Logistics Industry:

  • Compliance Costs and Financial Implications: Companies will face extra expenses as they are now required to purchase and sell emission allowances. In order to stay within their allotted allowances, substantial capital investments will be necessary for the adoption of emission-reducing technologies and sustainable fuel alternatives.
  • Operational Adjustments: Shipping companies must optimize vessel routes, reduce idle times, and adopt slow steaming practices to align with emission reduction targets. This will require careful planning and coordination to maintain the efficiency and effectiveness of supply chain logistics.
  • Market Competitiveness and Differentiation: Companies embracing sustainable practices will gain a competitive edge as eco-conscious customers and businesses are increasingly prioritizing environmentally responsible shipping solutions.
  • Collaboration and Information Sharing: Close collaboration with authorities, port operators, and stakeholders will help ensure accurate emission reporting and progress monitoring.

Conclusion:

Including maritime emissions in the EU Emissions Trading System marks a significant shift for the maritime logistics industry. While compliance with the regulation will present challenges, it also creates opportunities for the sector to embrace sustainability, foster innovation, and collaborate effectively to contribute to a greener future.

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