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Historic First: EU to Regulate Shipping Emissions

European legislators have agreed to regulate emissions from the shipping industry as part of the European Union’s emission trading system, one of the world’s largest carbon markets.

Ship loaded with cargo containers

Under the trading system, first launched in 2005, companies from a number of energy-intensive sectors like power generation and steel manufacturing are required to buy permits for the CO2 they emit, creating an incentive to decarbonize.

However, the system has so far excluded emissions from shipping. Around 3 percent of today’s carbon dioxide emissions come from the shipping industry, courtesy of the fossil fuels burnt by the 90,000 ships that are responsible for 90 percent of all trade on the planet, according to the Financial Times.

"If international shipping was a country, it would be the fifth or sixth highest in the world [for greenhouse gases], between Germany and Japan," says Simon Bullock, a researcher at the University of Manchester's Tyndall Centre for Climate Change Research.

With the new agreement, EU regulators say they’ll require shipping companies that dock in European ports to buy carbon credits to cover 40 percent of their CO2 emissions, starting in 2024. They intend to increase that share to 70 percent in 2025 and 100 percent in 2026.

Aoife O’Leary, CEO of the UK-based nonprofit Opportunity Green, says the agreement represents an “important and vital step” to get the shipping industry to pay for its climate pollution. By making it more expensive to run ships on heavy fuel oils, diesel, or liquefied natural gas, she said the emissions trading system could expedite innovation and improve the business case for zero-emissions technologies - like ships powered by green hydrogen - that are in the works but not yet viable on a commercial scale.



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