European shipowners demand bigger share of EU carbon revenues

European shipowners are calling for a threefold increase in the carbon allowances earmarked to support shipping’s energy transition, arguing that the sector contributes almost twice its share of emissions to the EU Emissions Trading System’s auction revenues.

A study published by European Community Shipowners’ Associations (ECSA) estimates that the proposed Sustainable Maritime Alternative Propulsion (SMAP) mechanism needs at least 330m allowances, compared with the 110m currently envisaged by the European Commission.

The association puts the required support at around €30bn ($33.6bn), aimed at narrowing the cost gap between conventional marine fuels and cleaner alternatives.

The proposal forms part of the ongoing revision of the EU ETS and remains subject to approval by the European Parliament and Council.

According to ECSA, maritime transport accounts for approximately 10% of emissions covered by the trading system but purchases almost 20% of the allowances auctioned.Unlike several industrial sectors, shipping has not received free allowances since joining the system in 2024.

With the phase-in period completed, shipping companies must surrender allowances covering 100% of their emissions falling within the ETS framework from the 2026 emissions year.

The association estimates that shipowners purchase roughly 90m allowances annually. At an illustrative carbon price of €100 per allowance, that would represent an annual outlay of approximately €9bn ($10.1bn). This is a modelling assumption rather than a fixed annual payment.

The Commission’s proposed SMAP mechanism would support companies using eligible lower-emission fuels and propulsion technologies by allocating allowances to offset part of their additional costs.

ECSA argues that the proposed reserve, covering 2028 to 2040, would meet only about one-third of the industry’s estimated requirements.

The association also wants support extended to energy-efficiency investments rather than concentrating on alternative fuels and propulsion systems.

Its secretary general, Sotiris Raptis, called on European lawmakers to expand the proposed reserve to provide greater certainty for investment in cleaner shipping technologies.

The intervention comes as shipowners weigh increasing carbon compliance costs against the substantial premiums associated with alternative fuels, fleet upgrades and new propulsion systems.

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