EU carbon market reform extends shipping evasion rules, targets alternative fuel uptake
The European Commission’s sweeping revision of the EU Emissions Trading System includes a distinct package of measures for the maritime sector, extending the scope of the market’s anti-evasion rules to smaller vessels and introducing a new mechanism to close the price gap between conventional and alternative marine fuels.
The maritime provisions form part of the broader ETS reform package unveiled in Brussels and are aimed at preventing shipping companies from reducing their carbon liabilities by inserting additional calls at ports outside the EU before entering the bloc, a practice regulators refer to as evasive routing. Under the EU ETS, which has applied to large ships over 5,000 gross tonnage since January 2024, exemptions have applied to certain container transhipment ports in third countries neighbouring the EU, such as Tanger Med in Morocco and East Port Said in Egypt, meaning a stop at those ports does not reset the calculation of a vessel’s EU ETS liability. The Commission’s new proposal extends the anti-evasion framework by broadening the list of ports subject to this treatment, revising the definition of an evasive port call, and for the first time classifying certain offshore worksites as ports of call for the purposes of the scheme.
The reform also extends the EU ETS’s maritime scope to smaller vessels than are currently covered, a change that responds to industry and campaigner concerns that ships just below the existing 5,000 gross tonnage threshold could otherwise avoid carbon costs altogether by operating just outside the regulated size bracket. Alongside the anti-evasion measures, the Commission proposed a new fuel mechanism for the sector modelled on an approach already used in aviation, intended to help close the cost gap between conventional bunker fuel and lower-carbon alternative marine fuels, with the aim of encouraging uptake, supporting investment in alternative fuel production, and positioning Europe as a bunkering hub for cleaner shipping fuels.
The World Shipping Council, representing global container shipping and vehicle carrier operators, welcomed the Commission’s approach to reinvesting a greater share of ETS revenues into maritime decarbonisation and the introduction of the fuel-price mechanism, while cautioning that some of the proposed port-related rules could inadvertently penalise ports with the infrastructure needed for transhipment, such as deep water and long berths, regardless of whether transhipment activity is actually taking place.
Port sector representatives offered a more critical assessment. The European Sea Ports Organisation, in comments coordinated with FEPORT, said the Commission’s proposal did not go far enough in recognising the role that ports and terminals play in decarbonisation and industrial competitiveness, and expressed regret that the reform stopped short of earmarking a share of maritime ETS revenues for targeted port investment, such as alternative fuels infrastructure and green port equipment. The organisations noted that shipping is estimated to generate around €7.65 billion annually in EU ETS revenue at current carbon prices, underscoring the scale of the financial flows involved in the sector’s inclusion in the scheme.
The maritime provisions follow a Commission report published in March 2025 that found no significant evidence of evasion or circumvention trends in the initial period after the EU ETS was extended to shipping, based on analysis of traffic data, transhipment activity and route announcements. However, continued monitoring identified isolated cases of potential circumvention, prompting environmental group Transport & Environment to publish a briefing in early July calling for an expanded list of covered non-EU ports, a lower transhipment activity threshold, and a mechanism to redistribute a share of ETS revenues generated on voyages involving neighbouring non-EU ports back to those countries, in order to discourage rerouting while preserving political acceptability of the anti-evasion framework.
The maritime package will now proceed through the same legislative process as the wider ETS reform, requiring agreement between the European Parliament and the Council of the EU before it can enter into force, with the sector’s stakeholders expected to continue engaging closely with negotiators given the scale of the revenues and competitive dynamics at stake for European and neighbouring ports.
