The European Union (EU) and European Parliament reached an agreement on December 17, 2022, to reform the EU Emissions Trading System (ETS) which now includes the maritime sector under the scheme. Going forward, shipping companies will have to pay for carbon emissions in Europe.
The new regulation will take effect by 2024, with a phase-in period spanning several years. According to analyst firm Siglar Carbon, the new agreement follows that 40% of 2024 emissions will have to be paid in 2025, 70% of 2025 emissions will have to be paid in 2026 and 100% of 2026 emissions will have to be paid in 2027.
Failure to comply with regulations could result in a fine or denial of ocean access to carriers. The rules incorporate all large vessels over 5,000 tonnes. General cargo vessels and off-shore vessels between 400-5,000 gross tons will be included in the regulation from 2025 and their inclusion in EU ETS will be reviewed in 2026. From 2026, payment will be required for the emission of methane and nitrous oxide.
The regulation will be consistently evaluated and could be expanded if the EU sees lack of progress in the UN’s International Maritime Organization (IMO). All that remains is for the EU Parliament and Council to pass the new ETS, but that is only a formality, Siglar Carbon noted.
Many leading carriers have warned the adoption of the regulations will add to the cost of shipping.
Source: Shipping Watch