It’s now Official. Shipping and the ETS.

On 16 May 2023 the Official Journal published Directive 2023/959, amending the 2003 ETS Directive, and Regulation 2023/957 amending the 2015 MRV Regulation. Shipping will enter the ETS as from 1 January 2024 as regards CO2 emissions, and from 1 January 2026 as regards emissions from two other greenhouse gases, Methane and Nitrous Oxide. The reporting obligations under the MRV will be extended from CO2 to these other two greenhouses gases as from1 January 2024. The emissions in both measures will be calculated on a tank to wake basis rather than on a wake to wake basis.

The amended ETS Directive

Vessels over 5000 gross tonnage for transporting for commercial purposes cargo or passengers will come within the scope of the EU ETS as from 1 January 2024, with a phased introduction of obligations for the shipping company to surrender each year 100% of allowances for verified CO2 emissions for intra-EU voyages within the ETS and emissions occurring at berth in an EU port, and 50% of verified CO2 emissions for extra-EU voyages from and to a port within the jurisdiction of a Member State. The phase-in means that 40% (20% for extra-EU voyages) allowances will need to be surrendered for calendar year 2024, 70% for 2025 (35%) and 100% (50% for extra-EU voyages) for 2026 and onwards. There will be no free allocation of allowances to shipping companies, which are defined as the shipowner, or the bareboat charterer or ship manager, that has assumed the responsibility for the operation of the ship from the shipowner and that, on assuming such responsibility, has agreed to take over all the duties and responsibilities imposed by the IMO’s ISM Code.

 Emissions are calculated on a tank to wake basis as defined in amended Article 3 ‘(b)“emissions” means the release of greenhouse gases… from ships performing a maritime transport activity listed in Annex I of the gases specified in respect of that activity”. Offshore vessels of 5000 gross tonnage and above will be included in the ETS from 2027. There will be a review in 2026 of whether to included general cargo vessels and off-shore vessels between 400-5000 gross tonnage in the ETS.

The amended MRV Regulation

The 2015 MRV Regulation sees the following changes. As from 1 January 2024 the Regulation will apply to greenhouse gas emissions, CO2, Methane and Nitrous Oxide, from vessels of 5000 gross tonnage and above transporting for commercial purposes cargo or passengers on voyages from a port of call in the EU to their next port of call and from their last port of call to a port of call in a State in the EU as well as to intra EU voyages.

Three months from adoption on 5 June 2023, an updated ship monitoring plan which shall describe the method for monitoring and reporting of Methane and Nitrous Oxide must be verified by an accredited verifier and submitted to the administrating authority of the company. Greenhouse gas emissions are reported on a tank to wake basis. Offshore vessels of 5000 gross tonnage and above will be included in the ‘MRV’ Regulation from 1 January 2025, as will general cargo vessels and off-shore vessels between 400-5000 gross tonnage.

And then there is the FuelEU Maritime Regulation which is nearing the conclusion of its legislative journey. On 23 March  2023 the European Parliament and the Council agreed on the amendments to the Commissions 2021 proposed FuelEU Maritime Regulation and in the European Parliament, the Committee on transport and tourism (TRAN) approved the provisional agreement on 24 May 2023. The new rules will be published in the Official Journal of the European Union and enter into force 20 days after publication, with the Regulation to apply from 1 January 2025.

FuelEU Maritime sets maximum limits on the yearly greenhouse gas intensity of the energy used by a ship, with targets will becoming increasingly ambitious over time to stimulate and reflect the expected developments in technology and the increased production of renewable and low-carbon fuels. The Regulation applies to commercial vessels of 5000 gross tonnes and above, regardless of flag, with exemptions for naval vessels, fishing vessels, ships using non-mechanical propulsion. It covers all energy used on board when the ship is at port in the EU or EEA , all energy used by the ship on voyages between EU or EEA ports and 50% of the energy used on voyages departing from or arriving at an EU or EEA port. The schedule of reduction from a 2020 baseline is: -2% from 2025; -6% from 2030; -14.5% from 2035;-31% from 2040; -62% from 2045; -80% from 2050.

Emissions are calculated on a wake to wake basis, rather than the tank to wake basis in the amended ETS Directive and the amend MRV Regulation. The targets cover not only CO2, but also Methane (CH4) and Nitrous Oxide (N2O).

A podcast on the implications for Shipping of the EU’s ‘Fit for 55’ agenda can be found at

Published by

Professor Simon Baughen

Professor Simon Baughen was appointed as Professor of Shipping Law in September 2013 (previously Reader at the University of Bristol Law School). Simon Baughen studied law at Oxford and practised in maritime law for several years before joining academia. His research interests lie mainly in the field of shipping law, but also include the law of trusts and the environmental law implications of the activities of multinational corporations in the developing world. Simon's book on Shipping Law, has run to seven editions (soon to be eight) and is already well-known to academics and students alike as by far the most learned and approachable work on the subject. Furthermore, he is now the author of the very well-established practitioner's work Summerskill on Laytime. He has an extensive list of publications to his name, including International Trade and the Protection of the Environment, and Human Rights and Corporate Wrongs - Closing the Governance Gap. He has also written and taught extensively on commercial law, trusts and environmental law. Simon is a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he currently teaches at Swansea on the LLM in:Carriage of Goods by Sea, Land and Air; Charterparties Law and Practice; International Corporate Governance.

2 thoughts on “It’s now Official. Shipping and the ETS.”

  1. With each passing day the regulations are getting stricter.
    But what about the cost of their implementation?

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