What is the EU Emissions Trading System?

The EU ETS is a cap-and-trade system designed to reduce greenhouse gas emissions across energy-intensive industries, power generation, aviation, and maritime transport. A total emissions cap is set, and companies operating in these industries must purchase and surrender EU Allowances to cover their emissions. One EU Allowance represents the right to emit one tonne of carbon dioxide equivalent. Each year, the overall cap allowance reduces, increasing pressure on carriers to cut emissions rather than simply absorb rising compliance costs.

What Changes for Maritime Transport in 2026?

Maritime transport has been gradually included in the EU ETS. In 2024 and 2025, carriers were required to cover only a proportion of their emissions. From 1st January 2026, this moves to full coverage. In addition to carbon dioxide, methane and nitrous oxide are now included in emissions calculations, broadening the scope of compliance and increasing the total emissions footprint carriers must account for. Most carriers recover ETS costs through dedicated surcharges or adjustments to ocean freight rates, so shippers should expect higher charges, greater cost volatility linked to allowance market prices, and more frequent adjustments to carrier pricing structures.

What Does This Mean for Shippers?

While ETS compliance obligations sit with ocean carriers, the commercial impact flows through to cargo owners. Shippers will need to consider rising freight costs driven by ETS surcharges, increased focus on emissions data and transparency, and the growing importance of sustainability conversations with carriers and logistics partners.

Woodland is closely monitoring how carriers are implementing alternative fuel strategies and optional biofuel schemes, although these solutions can be complex and may depend on trade lane, vessel availability, and carrier agreements. Please reach out to Woodland if you would like to discuss these options in detail.

How Can Businesses Prepare?

ETS should be viewed as part of a broader regulatory shift rather than a standalone change. Shippers can prepare by reviewing carrier surcharges, building ETS costs into freight budgets, engaging logistics partners on emissions reporting and reduction initiatives, and monitoring regulatory developments to avoid unexpected cost exposure. Early engagement and informed planning can help mitigate cost shocks while supporting longer-term sustainability objectives.

Woodland Group continues to explore all available sustainable solutions and is committed to working closely with clients to discuss how these developments may affect their supply chains. Our team remains available to provide guidance and support as businesses adapt to the evolving ETS landscape.

Summary

From January 2026, the EU ETS applies in full to maritime transport, covering 100% of regulated emissions and expanding the range of greenhouse gases included. While compliance obligations remain with ocean carriers, shippers will feel the impact through higher costs and greater emphasis on emissions transparency.

As sustainability regulations continue to evolve, understanding EU ETS and working with experienced partners like Woodland Group will be key to managing compliance and commercial risk. To request guidance on ETS impacts or advice on sustainable shipping strategies, please get in touch with our team.