Shipping included in the EU Emissions Trading System
Eckerö Line will join the EU Emissions Trading System EU ETS in 2024. The goal is a cleaner environment that we can enjoy and also preserve for future generations. A task Eckerö Line is happy to participate in. Environmental friendliness and responsibility are global trends in the shipping industry.
The EU ETS is the EU Emissions Trading System
The EU's objective is to reduce net emissions of greenhouse gases (GHG emissions) by at least 55% by 2030 and to achieve climate neutrality by 2050. The EU ETS is a key tool to achieve this goal. EU ETS is an abbreviation of European Union Emissions Trading System. It is the world's first emissions trading system and was established in 2005. The EU ETS is still the largest emissions trading system aimed at reducing greenhouse gases in several countries and industries.
Shipping is included in the EU ETS from 1 January 2024
Currently, the EU ETS covers electricity and heat production, energy-intensive industry sectors and commercial air traffic within the European Economic Area. From 1 January 2024, shipping and its operators will gradually join the EU ETS emissions trading system, so that we together can achieve the EU's climate goals.
Maritime transport plays a significant and essential role in the EU economy. It is one of the most energy-efficient forms of transport and at the same time a major source of greenhouse gas emissions. Maritime transport accounts for 3-4 percent of all carbon dioxide emissions in the EU; in 2021 this was over 124 million tonnes (link: https://climate.ec.europa.eu/eu-action/transport/reducing-emissions-shipping-sector_en)
The expansion of the EU ETS applies to carbon dioxide emissions of large ships (gross tonnage over 5,000 tonnes) regardless of the flag they sail under. The system will include:
- all emissions from ships calling at an EU port on a voyage within the EU
- 50 percent of emissions from voyages starting or ending outside of the EU
- all emissions are taken into account while a ship is moored at an EU port
As of 2024, Eckerö Line will pay for the carbon dioxide emissions from it´s ships m/s Finlandia and m/s Finbo Cargo as part of the EU's measures to reduce GHG emissions, and is thereby contributing to reaching the climate goals.
To ensure a smooth transition to the emissions trading system, the shipping companies will gradually increase the number of emission allowances they buy each year in relation to total emissions:
- 40 percent of reported emissions in 2024
- 70 percent of reported emissions in 2025
- 100 percent from 2026 onwards
How does the system work?
Companies buy emission allowances annually in the EU ETS trading system. The EU has set a cap on emission allowances. One purchased emission quota corresponds to one tonne of carbon dioxide emissions or one tonne of carbon dioxide equivalent. The market price of emission allowances is governed by supply and demand and the allowances are bought at an auction.
The cap on emissions is reduced every year in order to achieve climate neutrality in 2050. This puts pressure on companies to more quickly create measures that reduce their environmental footprint.
Some companies in sectors prone to carbon leakage receive free emission allowances to support their competitiveness and to prevent them from moving their production outside the EU. The revenue from the auctioning of emission allowances is used for climate and energy measures in EU member states.The EU ETS initially covers carbon dioxide emissions. As of 2026 both methane and nitrous oxide emissions will also be included in the ETS system.
What has Eckerö Line already done and how will the EU ETS affect customers?
For many years, Eckerö Line has worked to reduce emissions of greenhouse gases. We are committed to a joint and ambitious emission reduction programme in the shipping industry in accordance with the goals set by the EU and the IMO (International Maritime Organization). We are constantly developing our vessels to optimize energy consumption and reduce emissions. In addition to being beneficial for the environment, it is also positive for the company's finances in the long run.
M/s Finbo Cargo and m/s Finlandia use a low-sulphur fuel (0.1% sulphur content) and the amounts of emissions per ship are monitored. The measurement results are reported to the EU and IMO. The speed of the ships and bottom treatments also affect fuel consumption and thus the emissions. Therefore, speeds are optimized and bottom treatment is a part of maintenance during ships docking. M/s Finlandia also uses shore power instead of ship engines to generate energy when the ship stays longer in port in both Tallinn and Helsinki.
The transition to the EU ETS emissions trading system on 1 January 2024 will enhance Eckerö Line's efforts to reduce greenhouse gas emissions. As does the Fuel EU Maritime Regulation, which will enter into force in 2025; shipping companies will invest in development, use and new technology of renewable and low-carbon fuel. Both EU ETS and Fuel EU Maritime are large-scale systems and reforms in which Eckerö Line invests significantly financially. They cause a need to include costs in the price of the travel ticket.
Read more about the EU ETS system on the European Commission website.