by Lloyd's List

14 July 2025 (Lloyd's List) - SHIPOWNERS have urged the European Commission to scrap the Emissions Trading System for shipping, while greens want it expanded to cover more vessels.

ECSA European Shipowners called for “full harmonisation” of the ETS and FuelEU Maritime with the International Maritime Organization’s net zero framework, which will become the global green standard from 2028, pending its formal adoption in October.

ECSA said the ETS and FuelEU were introduced in part to spur the IMO towards adopting an international system for reducing shipping emissions.

“With the IMO net-zero framework now approved, this purpose has been achieved,” the group said.

ECSA said overlapping regulations would undermine the international negotiations and leave a disproportionate burden on shipowners.

It said the commission should start a review of the ETS and FuelEU after October, adding “avoidance of double regulation and double payment for the same greenhouse gas emissions must be ensured”.

The remarks were in response to a three-month public consultation by Brussels, which closed last week, on its review of the ETS, which will help shape its ambition level from 2040.

Green non-governmental organisation Transport & Environment, in a lengthy submission, countered that the commission should keep the ETS and expand its scope to cover smaller ships, because of their significant coastal emissions.

T&E argued the IMO regulation was too weak, and on its own would leave more than 85% of European shipping emissions untaxed.

“While the IMO’s framework makes progress in the global climate regime, it lacks ambition in ensuring that shipping polluters pay for their share of pollution,” T&E told the consultation.

“Both systems are necessary, especially as neither is sufficient on its own to meet EU climate objectives or cover the true climate cost of emissions.”

T&E calculated that the ETS would pull in about €10bn ($11.7bn) a year, while the global IMO measure would raise the same, despite its far greater scope.

ECSA secretary-general Sotiris Raptis told Lloyd’s List he would prove to the commission that the IMO measures were more environmentally ambitious than the European regulations.

He said ECSA’s own initial estimate of what the IMO would raise was closer to €30bn-€60bn.

In T&E’s submission, the group said the Commission should also consider phasing out by 2028 the exemption for certain ferry routes between small EU islands and the mainland, arguing clean alternatives were already available for these routes.

Both lobby groups called for ETS funds to be reinvested in helping bridge the price gap between green and fossil fuels.

Shipping groups and opponents of the ETS have long argued it would cause carbon leakage, when ships change their trade patterns to avoid taxes applying at certain places but not others.

T&E said solid and consistent evidence for ETS evasion was lacking, but the EU could consider new safeguards to disincentivise shipowners from doing it.

On routes most at risk, the EU could apply the carbon price on an origin-to-destination basis, instead of going by the first and last leg of ship voyages.

“This would further reduce the incentive to replace EU transhipment activities with non-EU ones using small feeder vessels,” T&E said.

It said the EU could also consider reducing the 65% transhipment ratio for adding other risky non-EU ports to the existing safeguard under the ETS, which at present covers only Tanger Med and Port Said East.