Shipping Carbon Price Loophole Lets Millions of Tonnes of CO2 off the Hook

Originally published on Transport & Environment.

More than 25 million tonnes of CO2 – corresponding to Denmark’s total CO2 emissions¹ – are exempt from the EU’s proposed carbon price for shipping, a new Transport & Environment (T&E) study shows. Arbitrary exemptions for ships such as those servicing oil and gas installations, as well as pleasure boats, will undermine EU shipping legislation and allow millions of tonnes of emissions to escape the hook, says T&E.

In July 2021, the European Commission proposed a CO2 pricing scheme (ETS) for shipping. This only applies to ships over a certain size (5,000 GT), and there are a number of exceptions for certain ship types.

In addition to exemptions for fishing and military vessels, vessels such as those operating offshore gas and oil vessels are also excluded, although on average they emit more than bulk carriers and oil tankers. This means that just over half of Europe’s ships are exempt from the proposal, despite accounting for almost 20% of EU ship emissions – twice what the Commission initially claimed the exemption would cover².

Jacob Armstrong, sustainable shipping officer at T&E, said: “It is good that the EU is finally trying to address the shocking climate impact of shipping. But its proposal based on arbitrary loopholes is getting rid of many highly polluting vessels. The EU needs to rethink its shipping legislation to ensure , that millions of tonnes of CO2 will not be unregulated. “

Picture of Valentin Schönpos from Pixabay

The Commission argues that this would reduce the administrative burden by reducing the number of vessels covered and still cover the vast majority of emissions. But an approach that only covers ships that pollute over a certain amount – rather than based on size – would regulate more emissions without imposing an administrative burden on small businesses, says T&E. T&E recommends a carbon threshold of 1,000 tonnes of CO2 per year, which will cover 12% more emissions than the current proposal³.

The EU shipping industry emits almost 130 million tonnes of CO2 each year, accounting for around 4% of the block’s total emissions.


¹ The total CO2 emissions from the exempted vessels amounted to 25.8 Mt – comparable to Denmark’s total CO2 emissions in 2020, 26.2 Mt. (, using Global Carbon Project data, 2021). This figure does not include Denmark’s non-CO2 emissions.

For another comparison, it also corresponds to all of France’s aviation emissions ( -fra- unfccc).

² T&E understands that the Commission has calculated 90% of the emissions coverage according to 50% outside the EU scope, which covers all journeys between EU ports and half of all journeys departing from and into the EU. However, the Commission does not make this explicit.

³ Currently, only ships over 5000GT need to report their emissions. The system proposed by T&E will require all ships over 400GT to report their emissions, but only be subject to the ETS if their annual emissions exceed 1,000 tonnes of CO2.

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