Decarbonisation and the role of European Union Allowances in shipping

Abstract

The shipping industry plays a pivotal role in global trade but is also a significant contributor to greenhouse gas emissions. As part of the global effort to combat climate change, the European Union (EU) and the International Maritime Organization (IMO) have introduced stringent regulations to decarbonize the sector. The inclusion of shipping in the EU Emissions Trading System (EU ETS) marks a transformative shift, requiring shipowners to purchase CO₂ emission allowances, thereby encouraging a transition to low-carbon fuels and sustainable propulsion technologies. This study examines the regulatory framework for maritime decarbonization, alternative fuels, and emerging technologies, as well as the financial implications of compliance. Through data analysis and strategic evaluation, the key challenges are outlined, including transition costs, fuel availability, and the necessity for vessel modifications. Findings indicate that while shipping decarbonization is technically feasible, it necessitates substantial investments and regulatory support. Technologies such as liquefied natural gas (LNG), ammonia, hydrogen, and biofuels present viable solutions, yet their successful implementation depends on regulatory clarity, economic viability, and international cooperation. In conclusion, compliance with EU and IMO environmental regulations is not only a legal obligation but also a strategic opportunity to achieve sustainable maritime development.