EU ETS revision for shipping by the European Comission

The European Commission’s July 2026 EU ETS revision for shipping introduces changes to EU ETS, MRV and FuelEU Maritime. It expands the regulatory perimeter, adds offshore operations to EU ETS, brings more ship categories into the reporting system, consolidates MRV and FuelEU reporting, aligns the responsible entity across regimes, and creates a new allowance-based support mechanism for sustainable fuels and zero-emission propulsion technologies.

The key legal anchors are relatively simple. EU ETS is governed by Directive 2003/87/EC. MRV is governed by Regulation 2015/757. FuelEU Maritime is governed by Regulation 2023/1805. The proposal amends all three. The most important ETS provisions for shipping are Article 3ga, which contains the maritime ETS surrender logic, and the proposed new Article 3gaa, which creates the allowance reserve for sustainable maritime fuels and zero-emission propulsion technologies. The most important MRV changes sit in Regulation 2015/757, especially the provisions on scope, monitoring plans, reporting and verification. The most important FuelEU change is the replacement of FuelEU’s standalone company definition with the EU ETS “shipping company” concept.

The maritime perimeter becomes wider

The proposal widens the maritime compliance perimeter in two ways. It expands the MRV reporting system, and it brings additional activities and ship categories closer to ETS exposure.

The current EU maritime framework has already moved beyond the original MRV model. Regulation 2015/757 was originally focused on ships of 5,000 gross tonnage and above and CO₂ emissions from maritime transport. Since the 2023 revision, methane and nitrous oxide are also part of MRV monitoring, and from 2025 certain smaller ships, including general cargo ships and offshore ships of 400 gross tonnage and above, enter the MRV system. The July 2026 proposal builds on that direction by bringing more ship categories into the MRV architecture and by making MRV the common data foundation for both ETS and FuelEU.

Offshore operations are added to EU ETS

One of the clearest scope expansions is offshore. Offshore operations were not part of the maritime ETS surrender framework before. The proposal changes that by adding offshore operations to the EU ETS architecture and by adapting MRV accordingly.

The proposal introduces the concepts of offshore operations and offshore worksites. The relevant compliance link is therefore not only a voyage between ports. For offshore operations, ETS exposure can be linked to an offshore worksite connected to a Member State’s territorial sea, exclusive economic zone or continental shelf. That matters for offshore support vessels, offshore construction, offshore wind, cable-laying, installation, maintenance and other specialised offshore activities.

Going forward, offshore companies will need to identify whether a ship performs or supports offshore operations, where the relevant worksite is located, whether the worksite has the required EU jurisdictional connection, and how those activities are captured in MRV reporting and ETS calculations.

More ship categories and sizes enter EU MRV

The proposal does not bring all ships between 400 and 4,999 GT into the same regime at the same time. It uses a staged approach. First, specific categories of smaller ships enter the MRV Regulation. Then the ETS Directive decides which of those MRV-covered activities are also covered by the ETS surrender obligation, and from when.

Under the proposed amendment to Article 2 of Regulation 2015/757, the MRV Regulation already applies from 1 January 2025 to general cargo ships below 5,000 GT but not below 400 GT. For those vessels, MRV applies to greenhouse gas emissions and energy used during commercial cargo voyages to or from Member State ports, and within Member State ports.

The proposal then adds a separate offshore category. Ships below 5,000 GT but not below 400 GT performing or supporting offshore operations connected with an offshore worksite in the territorial sea, EEZ, continental shelf or continental shelf sea of a Member State are brought into MRV for those offshore-related voyages and related in-port emissions. The same offshore logic is also added for ships of 5,000 GT and above.

A further category is added through the proposed new Article 2(1d) of Regulation 2015/757. This brings into MRV ships below 5,000 GT but not below 400 GT that are oil tankers, chemical tankers, gas carriers, LNG carriers, ro-pax ships and passenger ships. The proposal states that this applies to greenhouse gas emissions and energy used during commercial passenger and cargo voyages to or from Member State ports, and within Member State ports. The recital explains the timing: these ship categories should be included in Regulation 2015/757 from 2029.

The ETS treatment is narrower and later. The proposed amendment to the ETS Directive’s Annex I maritime transport entry covers maritime transport activities under Regulation 2015/757, but it excludes certain categories and applies transitional timing. In particular, the Annex I text excludes the maritime transport activities covered by Article 2(1d)(e) and (f) of Regulation 2015/757, meaning ro-pax ships and passenger ships below 5,000 GT but not below 400 GT. It also excludes, until 31 December 2030, the activities covered by Article 2(1a), Article 2(1aa), Article 2(1ba) and Article 2(1d)(a) to (d). Those references cover smaller general cargo ships, offshore-operation activities, and smaller oil tankers, chemical tankers, gas carriers and LNG carriers. From 1 January 2031, the Annex I entry then includes the activities covered by Article 2(1b) of Regulation 2015/757.

Practically, general cargo ships between 400 and 4,999 GT are already an MRV category from 2025, but their ETS inclusion is deferred under the proposed Annex I structure until after the transitional exclusion ending on 31 December 2030. Oil tankers, chemical tankers, gas carriers and LNG carriers between 400 and 4,999 GT enter MRV from 2029, and their ETS treatment is likewise deferred until after the transitional exclusion ending on 31 December 2030. Ro-pax ships and passenger ships between 400 and 4,999 GT enter MRV from 2029, but the proposed ETS Annex I text excludes the Article 2(1d)(e) and (f) categories from the maritime ETS entry rather than bringing them in on the same 2031 timetable. The proposal separately states that the Commission should examine the feasibility and impacts of including emissions from those smaller ro-pax and passenger ships by 31 December 2031.

Container transhipment ports: tighter anti-evasion rules as part of the EU ETS revision for shipping

The proposal also changes the treatment of container transhipment under the maritime ETS, the rules that determine whether a containership stop outside the EU is treated as a genuine port call or disregarded as a neighbouring container transhipment call.

The existing ETS framework already addresses this issue through Article 3ga(2) of Directive 2003/87/EC, as amended by Directive 2023/959. A stop by a containership at a neighbouring container transhipment port can be excluded from the definition of “port of call”. The purpose is to prevent operators from reducing ETS exposure by adding a nearby non-EU transhipment stop between an EU port and the wider international voyage. The July 2026 proposal tightens that mechanism in three ways.

First, the Commission’s list of neighbouring container transhipment ports would be reviewed and, where necessary, updated every year by 31 December, rather than on the current two-year cycle. The proposal explains that container transhipment patterns can change quickly and that a two-year update cycle may be too slow to capture market shifts.

Second, the transhipment-share threshold would be reduced. Under the current logic, a non-EU port may be treated as a neighbouring container transhipment port where container transhipment accounts for a high share of total container traffic. The proposal lowers that threshold from 65% to 50%. The Commission’s impact assessment explains that the lower threshold is intended to capture additional non-EU ports with high potential to attract transhipment from EU ports, while still limiting the measure to ports where transhipment represents most container traffic.

Third, the proposal adds a new infrastructure-based criterion for ports in the EU’s immediate vicinity. A port outside the Union could be listed if it is less than 150 nautical miles from a Member State port and has container transhipment infrastructure: draught above 11 metres, berth length above 250 metres, and suitable ship-to-shore cranes. Separately, the 50% transhipment-share test would apply to non-EU ports less than 300 nautical miles from a Member State port. The proposed Article 3ga(2) text states that containers are considered transhipped where they are unloaded from one ship to the port “for the sole purpose of being loaded onto another ship”.

The proposal also adds an important limitation. Ports in third countries applying measures equivalent to the EU ETS, including countries with an ETS linking agreement, would not be included on the list.

At the same time, the proposal introduces targeted relief for certain long-distance inbound container voyages. A new Article 12(3-g) would allow shipping companies to surrender fewer allowances, until 31 December 2035, for emissions from voyages by containerships of 10,000 TEU and above from a non-EU port to an EU port where the voyage distance exceeds 300 nautical miles. The same relief can also apply to related in-port emissions. The reduction is based on the share of containers unloaded at the EU port solely for onward loading onto another ship performing a voyage from that same EU port to a non-EU port.

MRV is strengthened as the common data foundation

The most important operational change is the consolidation of MRV and FuelEU reporting. At present, shipping companies deal with the MRV emissions report and the FuelEU report as related but separate compliance workstreams. This is changed to a “report once” model in which the MRV report becomes the common factual basis for MRV, ETS and FuelEU.

The proposal moves the relevant reporting date to 28 February for the MRV report and the FuelEU Compliance Balance report submitted to the verifier. The verified reports and compliance balance then need to be recorded by 31 March. This is a change from the existing FuelEU timetable, where the company provides the FuelEU report to the verifier by 31 January and the verifier records the compliant FuelEU report and verification report by 31 March.

That change is important. Shipping companies gain a later initial reporting deadline, but the period between submission, verification, correction and final database recording remains tight. For FuelEU pooling, banking or borrowing, that timing is critical because flexibility mechanisms depend on verified compliance balances and database execution. As a reminder, a contract for surplus or pooling is not enough if the underlying MRV data, FuelEU balance and database entries are not verified and recorded in time.

Monitoring plans are aligned

Monitoring plans also become more important. Under the proposal, the monitoring plan is no longer only the technical basis for MRV emissions reporting. It becomes the foundation for ETS emissions, FuelEU calculations, alternative fuel treatment, shore-side electricity, zero-emission technologies, wind-assisted propulsion and other energy-related data.

For ships already within the scope of MRV, the existing monitoring plan should be reviewed before the amended MRV requirements start to apply, which the proposal currently sets at 1 January 2029 or, in bracketed drafting, the second year after entry into force. The plan will need to be updated where it does not cover the additional data points required under the revised MRV–ETS–FuelEU workflow.

For ships falling within the scope of the MRV Regulation for the first time after 1 January 2029, the company must submit a monitoring plan without undue delay and no later than two months after the ship’s first call at a port under the jurisdiction of a Member State. The administering authority must then approve it within four months of that first call.

The responsible entity is aligned across MRV, ETS, and FuelEU

The proposal changes the responsible-party logic. Current FuelEU has its own definition of “company”, based on the shipowner or another organisation or person, such as the manager or bareboat charterer, that has assumed responsibility for operation of the ship and the ISM Code duties. The proposal replaces that standalone definition with the EU ETS “shipping company” concept.

The key legal reference is FuelEU Article 3(13), which would be amended to refer to the “shipping company” definition in Article 3(w) of the Directive 2003/87/EC amended by Directive 2023/959. This aligns FuelEU with the ETS responsibility model.

The nuance is important. The ETS Directive definition still refers to the shipowner or another organisation or person, such as the manager or bareboat charterer, that has assumed responsibility for the ship and the ISM duties. But in practice, the ETS system has been operationalised through Implementing Regulation 2023/2599, which requires a proper mandate where an entity other than the shipowner assumes ETS obligations. This effectively pushed compliance responsibility to the ship owner and cleared up the impracticality of the initial definition. The new proposal imports the ETS Directive definition into FuelEU, but it does not automatically rewrite every existing ETS mandate to include FuelEU without directly referencing the Implementing Regulation 2023/2599.

For shipping companies, the action point is contractual. Existing ETS mandates should be reviewed. A mandate that only refers to EU ETS surrender obligations may not be sufficient for FuelEU once the regimes are aligned.

A new allowance reserve supports cleaner fuels and technologies

The proposal introduces a new ETS allowance reserve for maritime decarbonisation through new Article 3gaa of the ETS Directive. This is a targeted support mechanism for eligible sustainable maritime fuels and zero-emission propulsion technologies, including electric and wind-assisted propulsion.

The mechanism reserves up to 110 million allowances for the period from 1 January 2028 or the first year after entry into force until 31 December 2040. The purpose is to cover part of the remaining cost gap between fossil fuels and sustainable maritime fuels, and part of the additional cost of deploying and operating zero-emission propulsion technologies.

The proposed support levels are significant: 55% of the remaining price differential for biogas and advanced biofuels, 90% for RFNBOs, 80% for low-carbon hydrogen and low-carbon fuels, and 90% of the additional cost of zero-emission propulsion technologies. The proposal also includes uplift mechanisms for certain island voyages, fuels with qualifying origin, and technologies fitted in Union shipyards.

Shipping companies may apply annually based on eligible fuel use and verified emission reductions from the preceding calendar year. That makes the support mechanism retrospective and evidence-based. If demand exceeds the available reserve, allocations are reduced uniformly, so the mechanism reduces cost exposure but does not guarantee full compensation.

The allowance reserve creates a contractual issue

The allowance reserve also creates a new contractual issue. The shipping company receiving the allowance allocation may not be the party that paid for the cleaner fuel or technology.

This is particularly relevant in time charter structures. A charterer may pay the premium for an eligible sustainable fuel, while the regulatory shipping company applies for and receives the allowance allocation. An owner may invest in wind-assisted propulsion, while a charterer benefits from reduced fuel consumption and ETS exposure.

The proposal recognises this issue by stating that allocated allowances should be taken into account where ETS costs are transferred to another entity under the ETS reimbursement mechanism, and that contracts may provide for the transfer of allocated allowances. This should be taken seriously in drafting. ETS clauses that only deal with reimbursement of surrendered allowances may become incomplete.

Conclusion

The July 2026 proposal changes maritime compliance by widening the regulatory perimeter and integrating the reporting architecture. Offshore operations are added to EU ETS. More ship categories enter the MRV and ETS-related framework. MRV is strengthened as the common reporting foundation for ETS and FuelEU. Monitoring plans become central compliance documents. FuelEU responsibility is aligned with the ETS shipping company concept. A new allowance reserve supports sustainable fuels and zero-emission propulsion technologies.

For shipping companies, the most important action points are practical. Identify which vessels enter MRV or ETS and when. Adjust reporting processes to the proposed 28 February submission date and 31 March verification/database deadline. Review mandates and contracts so that MRV, EU ETS and FuelEU responsibility are aligned. Ensure that fuel choice, data control, verifier interaction, pooling rights and allowance support are allocated to the right party.

source: bettersea.tech

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