Shipping must be included in the EU ETS to ensure carbon accountability, drive the adoption of clean fuels, and align the maritime sector with Europe’s broader decarbonization strategy.

• Environmental campaigners argue that the shipping industry’s efforts to reduce emissions are too slow.
• It’s hoped that including shipping in the European Union Emissions Trading System (ETS) will speed up decarbonization.
• Launched in 2005, the ETS compels manufacturers, power companies, and airlines to buy permits to cover each tonne of carbon dioxide they emit.

The European Commission has proposed adding shipping to the bloc’s carbon market for the first time, in a move that is set to shake up the industry after years of avoiding pollution charges by the bloc.

However, there is already disagreement about how it will work, given the complexities of the shipping industry and the challenges of decarbonization.

Here is what is currently known about the process ahead.

Why should shipping be included in the ETS?

With approximately 90% of global trade transported by sea, shipping contributes to nearly 3% of the world’s CO2 emissions.

Environmental campaigners argue that the industry’s efforts to reduce emissions are too slow and that incorporating shipping into the European Union Emissions Trading System (ETS) will accelerate decarbonization.

What are the current proposals?

Launched in 2005, the ETS compels manufacturers, power companies, and airlines to buy permits to cover each tonne of carbon dioxide they emit.

Prices for permits in the scheme are nearing 100 euros ($114.44) a tonne, a level analysts say will spur further investment in low-carbon energy sources.

Last July, the European Commission proposed gradually adding shipping to the ETS from 2023 until 2026, when shipowners would need to purchase permits covering all their emissions within the EU and 50% of their emissions from international voyages starting and ending in the EU.

The European Parliament and EU countries must negotiate the proposal before it becomes law.

However, the European Parliament wants shipping phased into the ETS earlier, by 2025.

It also wants the entity responsible for decisions affecting CO2 emissions, such as purchasing fuel, to be accountable, meaning they would need to buy carbon permits. That could be the shipowner, the commercial charterer, or the ship’s operator.

In contrast, the Commission has stated that shipowners should always bear the costs of CO2 emissions.

Parliament wants the EU to consider extending the ETS to cover all shipping emissions to and from Europe if regulatory efforts by the UN shipping agency, the International Maritime Organization (IMO), fall short.

If IMO measures cut emissions quickly enough to avert disastrous climate change, the EU could reconsider its inclusion of shipping in the carbon market, according to Parliament’s draft proposal.

The European Commission’s proposal is expected to undergo months of discussions. The European Parliament and EU member states can request changes to the text and agree on a final version.

How does the shipping industry view the proposals?

There are divergent views within the commercial shipping industry, which comprises various segments, including container, oil tanker, and dry bulk.

There is disagreement over who will pick up the bill and whether it falls to the shipowner or the party that hires a ship, known as the charterer.

With millions of dollars in fuel costs for every voyage, the stakes are high.

The Union of Greek Shipowners, representing the dry bulk and tanker associations, and INTERTANKO welcomed the inclusion of charterers, stating that those responsible for and benefiting from transporting cargo are also responsible for the emissions.

In contrast, the World Shipping Council (WSC), representing container lines, argues that shipowners should share responsibility for decarbonization and that the proposed definition of a responsible entity would compromise the ETS.

“Ship greenhouse gas emissions result from the combination of design technology, fuel consumed, and operational practice,” said WSC Chief Executive John Butler.

A regional EU ETS carbon price must apply to all parties that have a role in GHG reductions – including shipowners and operators.

Pressure is also building on the regulatory side.

The IMO’s goal is to reduce overall GHG emissions from ships by 50% from 2008 levels by 2050, a target that is lower than those set by countries such as the United States, which have pushed for the agency to adopt a zero-emissions target by 2050.

The IMO has stated that concrete progress was made in 2021 to combat climate change, including the introduction of new regulations to improve the energy efficiency of the world’s fleet. It added that it would work on revising its GHG strategy this year and finalize it in 2023.

The IMO has stated that regulations should be established through the agency and be global, in contrast to the EU’s approach, adding that regional legislation would not adequately address the concerns of developing countries.

Carbon Trading Alone Isn’t Enough — But It’s the Right Start for Maritime Decarbonization

The inclusion of shipping in the EU ETS will catalyze emissions reductions and the adoption of clean fuels; however, the industry requires actionable pathways to compliance.

Klean Industries Delivers Real-World Carbon Reduction Tools:

✅ Circular marine fuels from recovered tires and plastics
✅ KleanLoop™ blockchain platform for transparent carbon tracking
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✅ Policy-aligned solutions for EU, IMO, and global climate mandates

Work with Klean Industries to achieve ETS-aligned emissions reductions and lead your fleet toward a sustainable future » GO.