Starting in 2024, the European Union has extended the EU Emissions Trading System (EU ETS) to include the maritime sector. This move is part of Europe’s broader strategy to decarbonize the economy and reduce greenhouse gas emissions.
From 2025 onward, all vessels above 5,000 gross tonnage (GT) calling at EU ports—regardless of their flag—will be required to report CO₂ emissions and purchase carbon allowances (EUAs) for a portion of their emissions. The scheme will ramp up gradually:
40% of 2024 emissions to be covered in 2025
70% in 2026
100% from 2027 onward
Why Small Shipping Companies Are at Risk
1. Significant Cost Burden
Smaller shipping companies operate with leaner margins and often do not have the liquidity to absorb new costs. With EUA prices hovering around €90–100 per tonne of CO₂, a mid-size vessel could face millions in extra operating costs per year.
2. Lack of Access to Financial Tools
Larger shipping firms already engage in hedging strategies and utilize sophisticated carbon management platforms. Small companies often lack this financial literacy or access to carbon trading desks, making them more exposed to market volatility and regulatory penalties.
3. Complex Compliance Requirements
The new regulations require constant MRV (Monitoring, Reporting, and Verification) compliance—not just annually but per voyage. Setting up in-house MRV systems or contracting reliable services adds another layer of expense and complexity.
4. Administrative and Legal Burden
New clauses in charter party agreements must be negotiated to distribute carbon cost responsibilities.
National registries (Maritime Operator Holding Accounts) must be established and maintained.
Penalties for non-compliance are €100 per excess tonne, a level of risk many small operators cannot afford.
Could This Lead to Market Marginalization?
Yes. Without support or transitional mechanisms, many small and medium shipping enterprises (SMEs) may be pushed out of the European market entirely. They risk:
Losing competitiveness to larger, integrated shipping groups
Suffering from reputational and financial damage due to non-compliance
Missing out on cargo contracts that now require carbon transparency and accountability
Solutions: How Small Shipping Firms Can Survive the ETS Era
1. Adopt Reliable MRV Technology
Invest in emission tracking systems like EmiCO₂ntrol or work with verified third-party services to meet compliance standards.
2. Collaborate for Economies of Scale
Pool resources with other SMEs to access carbon markets, trading platforms, and legal consultants at shared cost.
3. Negotiate Charter Agreements Carefully
Ensure clear cost-sharing clauses in time charters and voyage charters to avoid bearing the full carbon cost burden.
4. Advocate for Transitional Support
National shipping associations and EU-level stakeholders should push for flexible deadlines, subsidies, or technical assistance for smaller players.
Final Thoughts
The EU ETS marks a turning point in green shipping regulations, but it is a double-edged sword. While it accelerates decarbonization, it also risks excluding smaller shipping companies that are the backbone of regional and short-sea shipping.
Survival will depend on quick adaptation, smart partnerships, and regulatory engagement to secure a more equitable path to sustainability.
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By MaritimeHub editors
