Charting the course to a stronger
EU ETS maritime 

Introduction

The EU ETS has shown that carbon pricing works: emissions from covered sectors have fallen by about 50% since 2005.

However, when the maritime sector entered the EU ETS in 2024, it did so facing a major decarbonisation challenge. Projections show that global emissions could keep rising by up to 130% of 2008 levels by 2050, and that EU seaborne transport alone could increase by 34% by the same year compared to 2015 levels.

The upcoming review represents a critical opportunity to make the EU ETS fit for the scale of the challenge, both as a tool to cut emissions and to support Europe’s leadership in next-generation maritime technologies.

As a coalition of innovative companies developing e-fuels and zero-carbon emission solutions, we call for a stronger EU ETS that provides the long-term certainty needed to scale decarbonisation in Europe by:

1. Including vessels between 400 and 5,000 GT

Why is a change needed. The ETS currently applies to vessels over 5,000 gross tonnage (GT) transporting cargo and passengers for commercial purposes. While the legislation provides for the inclusion of offshore vessels above this threshold from 2027, it still does not cover smaller vessels. As a result, the emissions of about 70% of the total number of vessels calling at EU ports are unregulated. This is also a missed opportunity to boost EU innovation as smaller vessels are often among the most suitable segments for the early adoption of zero-carbon emission technologies, and as we see with the potential of more than half of EU ferries to be electrified by 2035.

SASHA’s proposal. Extending the EU ETS to fully include vessels between 400 and 5,000 GT would expand emissions coverage, generate additional revenues for maritime decarbonisation, and create an important market incentive for investments in zero-carbon emission technologies and e-fuels. Moreover, recent extensions of the EU MRV already require emissions reporting for key categories of vessels in this size range, providing the administrative foundation for their future inclusion in the ETS.

2. Reinvesting a significant share of ETS revenues into the maritime sector

Why is a change needed. Member States are required to use all EU ETS revenues for climate action and the energy transition, while an increasing share of revenues is also channelled into EU funding programmes supporting decarbonisation projects. For the maritime sector, the EU has committed the value of 20 million EU ETS allowances through the Innovation Fund to support maritime decarbonisation projects until 2030, and some Member States like France have begun using national ETS revenues to launch dedicated calls for projects. While these initiatives are an important first step, they remain ad hoc and do not provide the long-term investment capacity needed to accelerate the deployment of e-fuels and zero-carbon emission technologies on the market.

SASHA’s proposal. The next ETS should provide structural earmarking of a significant part of maritime ETS revenues towards the development of e-fuels, zero-carbon emission technologies, including supporting infrastructure. With an extended ETS to smaller vessels, significantly higher revenues could be reinvested to decarbonise the sector. The extension to smaller vessels could generate an average of €1.7 billion annually between 2028 and 2035.

3. Directing support towards the most sustainable technologies to reduce the price gap

Why is a change needed. While setting a price on carbon is essential to send a strong signal, the higher cost of maritime e-fuels compared to traditional fossil and less sustainable options, such as LNG and biofuels, as well as the lack of long-term demand certainty, continue to delay investment decisions and prevent projects from reaching final investment decision (FID). Public support should therefore be strategically targeted to bridge the price gap and boost market uptake of the technologies capable of delivering the deepest long-term emissions.

SASHA’s proposal. Building on the experience of the e-SAF Early Movers Coalition in aviation, an e-SMF initiative based on a double-sided auction mechanism supported by ETS revenues would support bridging the price gap in favour of e-fuels, de-risk early markets and unlock private investment. Specific support for the development and uptake of zero-carbon emission technologies and related infrastructure will also be needed. In addition, revising the ETS zero-rating provisions will be essential to better differentiate support between e-fuels and less sustainable alternatives, ensuring that the strongest incentives are directed towards the cleanest technologies.

4. Maintaining ambition on both the EU ETS and the IMO NZF

Why is a change (not) needed. The EU ETS is the only instrument pricing EU emissions for large ships, and the IMO’s global Net-Zero Framework (NZF) remains under negotiation and is not planned to enter into force before 2030 if adopted. In case of an adoption, there is still a significant ambition gap: the current draft of the NZF is estimated to leave more than 85% of EU emissions unregulated, to generate much less revenues, and would not impose an emission ceiling. This makes the EU ETS indispensable to ensure that the maritime sector remains on track to contribute to EU’s emission reduction targets. 

SASHA’s proposal. The EU ETS should be maintained alongside an ambitious IMO NZF to maximise emissions reductions and investment in clean shipping. The EU ETS already contains provisions allowing the Directive to be adapted to ensure coherence with future IMO measures and avoid double payment. While an NZF would create a global incentive to use cleaner fuels, the EU ETS remains indispensable to drive absolute emissions reductions and generate important revenues that can be reinvested in Europe's maritime decarbonisation technologies.