EC report on the functioning of the European carbon market in 2024

The European Union has published its latest assessment of the EU Emissions Trading System (EU ETS), the flagship mechanism underpinning the bloc’s climate policy. Built on the “polluter pays” principle, the EU ETS caps and prices emissions from the energy, industry and maritime sectors, as well as part of aviation, covering around 40% of the EU’s total greenhouse gas output.

Aviation emissions increased by 15%, largely due to a broader geographical scope that once again includes certain non-domestic flights. Meanwhile, 2024 marked a milestone with the first inclusion of maritime transport emissions under the system. The system covers all emissions from voyages between EU ports as well as 50% of emissions from voyages to or from third countries. Shipping companies’ obligation to surrender allowances is introduced gradually, through a phase-in period lasting until 2026. During this period, shipping companies are required to surrender allowances in 2025, for 40% of the emissions reported in 2024, and in 2026 for 70% of emissions reported in 2025.

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