Maritime Transport and The European Union - Emissions Trading System EU ETS The EU Emissions Trading System (EU ETS), established in 2005, is a cap-and-trade system aimed at reducing greenhouse gas emissions, now extending to maritime transport from January 2024. It requires entities to monitor, report, and surrender allowances, with penalties for non-compliance. Articles Steamship Mutual Published: December 14, 2023 Contact author Download article pdf Background and Overview of the ETS Members whose vessels are trading to the EU will be aware that the requirements of the European Union Emissions Trading System [EU ETS] will apply to maritime transport from 1st January 2024. The imminent arrival of this regime in the maritime sector has given rise to a many questions, particularly concerning practical aspects of the scheme, which this article will seek to address. The EU ETS, which was established in 2005, is the EU’s principal tool to mitigate the effects of climate change. It reflects the fact that significant financial resources are required to achieve the goals, initially of the 1997 Kyoto Protocol, and subsequently the Paris Agreement on climate change.  In order to generate the necessary resources, the EU ETS imposes a financial cost upon the greenhouse gas (GHG) emissions of entities operating in the European Union. Further, the EU ETS has the objective of reducing EU economy-wide GHG emissions to enable the EU to meet its commitments under its “Fit for 55” package. That involves reducing EU GHG emissions by at least 55% compared to 1990 levels by 2030.  The EU ETS is referred to as a “cap and trade” system. Each year a limit or cap is set on the number of emission allowances. These allowances (EUA) are financial instruments that can be bought and traded. Each EUA confers the right to emit one tonne of CO2, or the equivalent amount of other GHGs, such as Nitrous Oxide, Methane or Perfluorocarbons (PFCs). The cap decreases each year to ensure that to