This Capital Link Trending News webinar, hosted by Mr. Nicolas Bornozis, President of Capital Link, featured a discussion with Mr. Sotiris Raptis , Secretary General of European Shipowners | ECSA , on the European Commission’s proposed revision of the EU Emissions Trading System (EU ETS) for shipping.
Mr. Sotiris Raptis explained the proposal’s key elements, including a lowered climate target and the allocation of ETS revenues, emphasizing that the shipping industry’s annual contribution of 9 billion euros is significant. He highlighted concerns about competitiveness, the risk of double regulation with future IMO measures, and the need for the EU to commit to withdrawing its measures once a global agreement is in place.
Mr. Raptis advocated for the ETS revenues to be used more effectively to support the maritime transition, particularly in developing a robust industrial base for clean technologies and sustainable fuels in Europe.
The discussion also touched on the interaction between the EU ETS and the FuelEU Maritime regulation, and the need to harmonize reporting requirements to reduce the administrative burden on shipping companies. The association represents 21 national shipowners’ associations and carries their case to the Commission, the Parliament and the member states in Brussels.
Please click the following link to view the discussion:
What the Commission has put forward
Shipping entered the EU ETS under a proposal first tabled in 2021. The new law covers the period from 2030 to 2040, and Mr. Raptis was adamant that it amounts to more than an extension.
The central question heading into the Parliament and the Council is climate ambition, meaning the reduction target that applies to every ETS sector, shipping included. The proposal carries a lower target than the existing regime, which implies a lower carbon price in the years ahead.
Alongside that sit a set of exemptions, each running to 2035, small islands, the outermost regions and ice-class vessels. Offshore vessels receive special provisions, with one reporting system applying to 2031 and a different one from 2031 onward.
The proposal also earmarks €10 billion for sustainable fuels and clean technologies through a new Commission mechanism and directs 50% of the ETS revenues held by national governments toward eight priority sectors, shipping being among them.
The changes European shipowners want
Mr. Raptis set out three asks on the structure of the system, and the first, as expected, concerns the exemptions. ECSA wants them to be permanent for the full life of the system instead of expiring in 2035, and wants them made mandatory for member states. Application today is discretionary, and some countries decline to apply the islands derogation, which he believes undermines the position of shipping companies against road transport.
The second concerns offshore vessels. Running two separate reporting systems for the same companies, one to 2030 and another from 2031, serves no purpose he could spot and carries an administrative cost. ECSA has asked the Commission to stop the clock until 2031.
Last but not least, under FuelEU Maritime and the ETS, the same companies making the same port calls and reporting the same emissions have had to do so under two different sets of rules. He welcomed the proposal’s move to align the ETS with the EU MRV framework, but also pressed for further harmonization of reporting requirements.
Where the money goes
Shipping contributes €9 billion a year to the system, which over a ten-year period comes to more or less €90 billion. How that sum is used is what primarily concerns ECSA. The revenues split 25% to EU funds and 75% to national budgets, which leaves most of the money with governments. The Commission’s share goes mainly to the Innovation Fund.
On the new mechanism earmarking €10 billion between 2028 and 2035, his assessment was that against an annual contribution from shipping of €9 billion, the sum is simply “too little.”
He also took issue with its scope. The eligible fuels are well chosen in his view, yet the same cannot be said about technologies, since the proposal points mainly toward zero-emission technologies, naming batteries and wind propulsion. Energy efficiency projects are the obvious first step for many companies, and he made the case for opening the mechanism to those and to other propulsion technologies, on the basis that whatever delivers carbon savings should qualify.
On the national side of things, Mr. Raptis welcomed both the 50% earmarking and the permitted uses, which cover energy efficiency, uptake and the scaling of sustainable fuels. What ECSA wants added is a concrete requirement on how governments spend the money, and an earmarking of 50% for shipping alone. The association is not asking for more than what shipping contributes, and the money is not intended for shipping companies. The purpose he described is building a robust European industrial base in clean technologies and fuels, which he sees as a question of energy security as much as of shipping.
Two instruments, two purposes
Asked to separate the ETS from FuelEU Maritime for a broader audience, Mr. Raptis noted that the ETS is a pricing mechanism. It places a carbon premium on emissions generated, and its function is to raise revenue that finances the uptake of clean technology and clean fuels. He further added that a pricing mechanism is not designed to change investment decisions on its own. Setting a carbon price equal to the full cost gap of a new sustainable fuel would, in his view, crash the market, in shipping and in the power sector alike.
FuelEU Maritime is a fuel standard with absolute targets. The requirement is a 2% improvement in carbon intensity by 2025, rising to 6% by 2030, having its intermediate targets running to 2050. Companies comply or pay a penalty, and the purpose is to generate investment.
The IMO question
Avoiding double payment and double administrative burden was ECSA’s starting point in their approach to European policymakers. Mr. Raptis stated the association’s position was that two parallel systems should not exist, and the objective should be one global regulation agreed at the IMO. What makes shipping competitive against other transport modes, he says, is a single regulatory framework decided at that level. Once an IMO agreement is reached, his position is that the EU should withdraw the European measures.
He also linked that commitment to the negotiations themselves. Reaching an international agreement requires trust with international partners, and being seen as a credible partner requires the EU to make serious commitments of its own. The message that European measures would fall away has not been sent, either before the IMO meeting in October 2025 or in the context of the current ETS revision. Feedback from third countries reaching ECSA through its members points in the same direction.
Some progress has come since then. The Commission has pledged that shipping companies under the ETS will not pay twice once an international agreement exists and has agreed to consider ways of avoiding a double administrative burden. Mr. Raptis counted both as progress and as short of what is needed, which is a commitment that the measures go away.
On the question of aligning regional frameworks under a global one, his answer was that once an international agreement exists, it should apply internationally, without parallel systems sitting beneath it.
Competitiveness and the fuel gap
European shipowners account for 35% of the global fleet, down from 40% six years ago. Mr. Raptis disclosed that European-owned tonnage at sea has grown steadily and stands above where it was five or six years ago. The share is falling because other jurisdictions are growing faster.
He described the regional regulations as both a burden and an opportunity, as they add transportation costs, and they also carry the revenue that could close the widening innovation gap between Europe and other regions.
On the energy transition itself, he pinpointed European owners as responsible for 44% of the sustainable fuel-powered vessels in the orderbook worldwide. Nevertheless, the issue remains that sustainable fuel availability is limited, and in Europe he described it as absent, considering China is manufacturing much of the clean technology and clean fuel that ships will need. “There is no availability without affordability,” he clarified, since fuels have to become affordable before they become available at scale. The technology exists, and what remains is scaling both the technology and the fuels, which takes investment.
A process of this kind normally takes 18 to 24 months. The indications reaching ECSA point to a faster run. Parliament and Council are expected to agree their negotiating positions by December, and trilogue negotiations are starting in January and concluding in March. Mr. Raptis noted that this is the first timeline circulating.
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