Report: EU ETS Not Being Circumvented
The European Commission has adopted a report on the implementation of the EU Emissions Trading System (ETS) for shipping that indicates there is no evidence of major changes in the market that might indicate it is being circumvented.
The EU ETS was extended to include maritime transport from January 1, 2024. The report provides an initial analysis of the impacts of this recent policy development that covers around 12,000 large ships.
The report’s analysis of shipping traffic data does not show evidence of a general trend in relocation of container transhipment activities, nor does it bring to light any clear evidence suggesting that shipping companies are adding stops at neighboring non-EU ports.
Furthermore, the data provides no evidence of a modal shift towards road transport or an increase in the use of smaller ships, which might have suggested evasive behavior.
Forward-looking indicators, including route announcements and planned investments in ports, similarly reveal no discernible trends indicating a general change in market behavior, despite identifying a few isolated cases of potential circumvention. Furthermore, the report finds no evidence of reduced shipping services to EU islands or outermost regions.
In tandem, the Commission adopted another maritime report assessing the potential inclusion of small ships between 400 and 5 000 gross tonnage under the scope of the EU regulation for the Monitoring, Reporting and Verification (MRV) of maritime GHG emissions.
The analysis identifies that over 5,300 smaller vessels – emitting around 11 million tonnes of CO2 every year – are currently not covered by the legislation. Including these ships could increase the amount of emissions covered by the legislation by around 9%, while expanding the number of regulated ships by around 42%.
Recurring annual MRV-related administrative costs for smaller vessels are projected to be similar, if not slightly higher, than for larger vessels. Consequently, the balance between administrative costs and additional monitored GHG emissions is less favorable for smaller ships.
The report notes that the net present value of additional administrative costs for companies and competent authorities is higher than the monetary potential of GHG emission savings attributable to the MRV maritime Regulation alone. Yet, the analysis suggests that these findings could shift if the GHG emission savings from the possible integration of smaller vessels in other GHG mitigation policies, such as the EU ETS and FuelEU, were considered. An assessment of these potential additional benefits will be considered in the context of the 2026 review of the EU ETS Directive.
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