ECSA Calls on EU to Triple Funding to Decarbonize Shipping

The European Shipowners Association, European Shipowners (ES|ECSA), has called on the European Union to triple the financial support and carbon allowances planned to drive the decarbonization of shipping. According to a new study by the association, at least 330 million emission allowances from the EU Emissions Trading System (EU ETS) are needed to create a credible market for sustainable fuels and technologies, compared with the 110 million currently proposed by the European Commission, which would cover only a third of what is required.

The mechanism, known as the Shipping Maritime Allowance Pool (SMAP), does not provide direct payments but instead allocates EU ETS emission allowances to shipowners that adopt eligible fuels and technologies, covering part of the cost gap compared with conventional fuels. The Commission's proposal envisages covering 55% of the price differential for biogas and advanced biofuels, 80% for hydrogen and low-carbon fuels, and 90% for renewable fuels of non-biological origin (RFNBO) and for eligible technologies. ECSA warns that if applications exceed available funds, support would be reduced proportionally, weakening the incentive to invest.

Shipping has been part of the EU ETS since January 1, 2024, and from reporting year 2026 onward must cover 100% of its emissions within the system. Unlike sectors such as steel, cement, chemicals and aviation, the shipping sector has never received free emission allowances. Although it accounts for around 10% of the emissions covered by the EU ETS, shipping purchases close to 90 million allowances per year, equivalent to nearly 20% of all allowances auctioned under the system, which at a price of 100 euros per allowance would represent an annual contribution of close to 9,000 million euros, according to the ES|ECSA study.

The 110 million allowances proposed by the Commission would be distributed between 2028 and 2040, equivalent to around 8.5 million allowances per year if spread evenly, far below the roughly 90 million the sector purchases each year, according to the ES|ECSA analysis. Even with the reserve expanded to 330 million allowances, equivalent to around 33,000 million dollars according to Portal Portuario, it is estimated that less than a third of the sector's contribution to the EU ETS would be channeled back into its own decarbonization.

ES|ECSA urged the European Parliament and the Council to at least triple the EU ETS revenues allocated to the SMAP and to ensure that support covers all sustainable fuels and technologies, including energy efficiency projects. Sotiris Raptis, Secretary General of ES|ECSA, stated that the SMAP can contribute to shipping's energy transition only if its size matches the scale of the challenge and covers all technologies that deliver carbon savings.