EU ETS: The Carbon Invoice
Grades embarrass; invoices compel. From 1 January 2024 the EU extended its Emissions Trading System — the cap-and-trade market that has priced European industrial carbon since 2005 — to shipping. The mechanism is blunt: for every tonne of in-scope emissions, the shipping company must buy and surrender one EU Allowance (EUA) at the market price. There is no free allocation for shipping. Every covered tonne costs money.
Scope: the same ships, the familiar split
Coverage tracks the MRV regime deliberately: ships of 5,000 GT and above calling at EU/EEA ports, any flag. The geographic arithmetic is the one FuelEU will reuse: 100% of emissions on voyages between EU/EEA ports and at berth in EU/EEA ports; 50% of emissions on voyages between an EU/EEA port and a third country — Brussels pricing half of every leg that touches Europe.
Two design details close obvious loopholes. Designated transhipment ports near the EU — Tanger Med in Morocco, East Port Said in Egypt — do not count as ports of call, so a container line cannot shorten its "EU voyage" by relaying boxes just outside the border. And gas coverage widens with the data: CO₂ only until 2025, plus methane and nitrous oxide from 2026 — possible precisely because MRV began monitoring those gases in 2024.
The phase-in, and the calendar
The entry was cushioned, briefly: companies surrendered allowances for 40% of in-scope 2024 emissions, 70% of 2025 emissions, and 100% from 2026 emissions onward. The cushion is now history — current-year emissions are fully priced.
The rhythm each year: MRV-verified emissions for year N are established, and the corresponding allowances must be surrendered by 30 September of year N+1, through the company's account under its administering authority (the member state to which the company is attributed). The 2026 emissions year — the first at 100%, with three gases — is settled by 30 September 2027.
Who holds the obligation
The shipping company is the registered owner by default. The obligation can move to the manager — the ISM DoC holder — but only by an explicit, signed mandate submitted to the administering authority; absent that document, it stays with the owner. A time charterer or beneficial owner cannot hold it. Since the party paying for compliance is often not the party whose decisions drive emissions, ETS cost allocation clauses (BIMCO's among them) have become standard charter party furniture.
Enforcement is financial first — penalties on top of the undiminished obligation to surrender — and existential eventually: persistent failure can see a company's ships denied entry to EU ports.
The through-line
The ETS put a market price on the themes of every previous lesson. The fouled hull of the resistance course now buys allowances for its extra tonnes. The verified data of the MRV lesson is now, literally, the invoice basis. What the ETS does not do is care what fuel produced the tonnes — a cheaper conventional tonne and a costlier green one are the same EUA. Fixing that blind spot required one more regulation, and it is the last lesson.
Primary reference: ClassNK, FAQs on the EU-ETS for Shipping (Edition 3.0, February 2026).