The inclusion of the shipping sector in the European Emission Trading Scheme (EU ETS)

The European Union Emissions Trading Scheme (hereinafter referred to as ‘ETS’), which has been in place since 2005, is the EU’s main tool for reducing greenhouse gas emissions and combating climate change. It is estimated to have reduced greenhouse gas emissions in the territories of the EU countries by 42,8 % in the industry sectors which are covered so far thereby, such as: (a) electricity and heat production plants, (b) energy-intensive industries and (c) aviation. The ETS, has already undergone several revisions, and is currently under the fourth phase of negotiation (2021-2030), in order to be consistent with the overall objectives of EU climate policy and the European Green Deal.

In particular, as part of the ‘Fit for 55’ legislative package, the European Commission proposed on July 14, 2021, to strengthen the ETS so that by 2030 the emissions cap from the industry sectors covered thereby is reduced by 62% compared to 2005 levels. Beyond reducing carbon emissions, the stated purpose of the revision of the ETS is to create a long-term pricing strategy, while providing measures to create an effective monitoring, reporting and verification system.

In 2021 the EU decided to extend the ETS to new industry sectors, namely shipping, construction of buildings, road transport and others. The European Commission’s proposal to include the shipping industry in the ETS were approved by the European Parliament, which led to the adoption of Regulation 2023/957/EU and Directive 2023/959/EU (hereinafter referred to as the “amending Directive”) on 10 May 2023, which were published in the Official Journal of the EU on 16 May 2023 and entered into force in June 2023.

The new measures of the revised EU ETS shall come into force and become applicable as from January 1, 2024.