EU agrees preliminary ETS deal for shipping

EU institutions have hammered out a preliminary agreement to include shipping within the scope of the emissions trading system (ETS).

Under the deal struck late Tuesday evening, all ships of 5,000 gt and over within the EU will be required to pay for 100% of their emissions, while 50% of the emissions on voyages between EU and non-EU ports will be covered.

The percentage of emissions covered will increase over time, starting at 40% in 2024, moving to 70% in 2025, and reaching 100% by 2026. These figures still need to be confirmed by member states during the next negotiating round.

Compared to the initial European Commission proposal, an agreement was reached not only to include CO2 in the ETS but also methane and NOx, as well as offshore vessels over 5,000 GT.

Negotiators also secured earmarking for 20m ETS allowances, which correspond to €1.5bn ($1.6bn) under the current ETS carbon price, to be reinvested into the sector via an innovation fund.

The ETS is part of the “Fit for 55 in 2030 package”, which is the EU’s plan to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. The next meeting on the ETS is scheduled for December 16 and 17 where negotiators will try to reach an overall agreement on the ETS revision.