EU ETS
EU Emissions Trading System
Meaning
The EU ETS requires shipping companies to buy and surrender carbon allowances (EUAs) for CO2 emitted on voyages to, from and within the EU.
Also written as Emissions Trading System, EU emission allowances, EUA
EU ETS explained
Shipping joined the EU ETS in 2024 for ships of 5,000 gross tonnage and above. Emissions on voyages within the EU and at berth in EU ports count in full; voyages between an EU and a non-EU port count at 50%. The share of emissions that has to be surrendered phased in from 40% for 2024 to 100% from 2026.
The legal obligation sits with the shipowner or the company that manages the ship, but charter parties now pass the cost to whoever controls the voyage, usually the charterer. That makes ETS a standard recap point.
Example
A voyage from the US Gulf to Rotterdam burning 2,000 tonnes of VLSFO emits about 6,200 tonnes of CO2. At 50% coverage that is about 3,100 allowances, roughly €230,000 if EUAs trade near €75 (allowances are priced in euros).
Watch out for
Agree in the recap who pays for EUAs, how they are calculated and when they are transferred. Silence leaves the cost with the owner.
Related terms
FuelEU Maritime
FuelEU Maritime is an EU rule, in force since 2025, that caps the greenhouse gas intensity of energy ships use on EU voyages and tightens over time.
CII
CII (Carbon Intensity Indicator) is the IMO's yearly A-to-E rating of a ship's operational CO2 emissions per unit of transport work.
TCE
TCE (time charter equivalent) converts a voyage's freight into daily earnings: freight minus voyage costs, divided by the days the voyage takes.