The EU Emissions Trading System (ETS) will be in effect as of January 2024

To accelerate the transition towards a net-zero emission transportation sector, the EU is implementing several regulatory initiatives that will increase the cost of CO2 emissions in transport.

In July 2021, the European Commission launched the 'Fit for 55' package intended to enable the EU to reduce its net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels and ultimately achieve climate neutrality by 2050. The 'Fit for 55' package includes a range of new schemes, initiatives, and regulations, one of which is the EU Emissions Trading System (ETS).

Understanding the EU Emissions Trading System

Established in 2005, the EU ETS is a cap-and-trade scheme that has now been extended to the shipping industry. It is central to the EU’s strategy to reduce CO2 emissions and sets a maximum allowance for the total amount of greenhouse gasses that may be emitted by companies inside the EU in a given year. Companies subject to EU ETS have to buy allowances based on the amount of greenhouse gases they emit.

The number of allowances available EU-wide will decrease every year, driving the total emissions of greenhouse gases down towards the 2030 and 2050 targets.

Implementation

In Q4 2022, the European Parliament decided to establish the EU ETS system for the shipping industry by 1 January 2024. This will be implemented as follows:

• In 2024, companies must submit allowances for 40% of their verified emissions.
• In 2025, companies must submit allowances for 70% of their verified emissions.
• From 2026 onwards, companies must submit allowances for 100% of their verified emissions.

Application 

The ETS will apply to all maritime services with at least one call within the EU. 100% of emissions will be considered for legs between two EU ports, while 50% of the emissions will be considered for legs between EU ports and non-EU ports.

At this point, long-term costs are difficult to estimate, as many factors will affect the future price of CO2-emission allowances traded within the EU ETS.

At DSV, we are committed to keeping you informed about significant developments in the transport and logistics industry that may impact your business. If you have any questions related to surcharges or require further information, please reach out to your regular DSV contact person.