Shipping’s addition to the EU’s Emission Trading System – a step in the right direction

What is it?

The EU Emissions Trading System (ETS) is the world’s oldest and largest carbon market. Set up in 2005 to combat emissions in the EU, the ETS originally focused on energy-intensive industries but has broadened over the years to include aviation, and now shipping and road transport.

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The system works introducing a cap on the total amount of permittable greenhouse gas (GHG) emissions, with the cap reducing over time to drive down emissions.??

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What does it mean for shipowners and operators?

Shipowners and operators will have to buy carbon credits for when their vessels are sailing in EU waters or, after a transition period, for voyages that begin and end in EU waters.

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They will have to buy a certain number of credits each year and can choose to sell these on to other shipowners if they think they won’t need them (if their vessels emit less GHG) and they can also buy credits from other shipowners if they think they’ll need more.

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How will it help drive maritime decarbonisation?

Not only is this a financial incentive to reduce a vessel’s carbon emissions, but each year the amount of carbon credits available to buy decreases, effectively forcing vessels to become greener over time.

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While the option to buy and sell credits will still be available, meaning some vessels might not be any greener than at the beginning, the tightening cap means that the industry as a whole should see its emissions decrease with time.

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Why is it important to ZeroNorth?

At ZeroNorth, we support any initiatives that helps drive decarbonisation action in the shipping industry and encourages shipowners and operators to make greener decisions today.