The European Shipowners’ Association (ECSA) has called on the European Parliament and the Council of the European Union to triple the reserve of emission allowances allocated to funding the use of sustainable maritime fuels and low- or zero-emission propulsion technologies. The organization proposes increasing the resources planned under the new Sustainable Maritime Alternative Propulsion (SMAP) mechanism, included in the proposal to revise the European Union Emissions Trading System (EU ETS), from 110 million to at least 330 million emission allowances.
The request is set out in a study published this Thursday, October 15, entitled Creating a market for sustainable maritime fuels and technologies: How can ETS revenues contribute?, in which the association analyzes the funding needs of the maritime transport energy transition and the scope of the instrument presented by the European Commission on July 17.
According to ECSA’s estimates, the 110 million allowances envisaged by Brussels would cover only one-third of the estimated needs for the period from 2028 to 2040. The shortfall amounts to approximately 220 million additional emission allowances, which the organization considers necessary to facilitate the use of alternative fuels and the adoption of technologies designed to reduce ships’ emissions.
The study is based on maritime transport’s economic contribution to the European emissions trading system, which began applying to the sector on January 1, 2024. Following the phase-in period established by the legislation, shipping companies must surrender, from the 2026 emissions year onward, allowances equivalent to 100% of emissions covered by the EU ETS.
ECSA estimates that maritime transport accounts for approximately 10% of emissions covered by the system, but purchases around 90 million allowances annually, equivalent to almost 20% of auctioned allowances. The association notes that, unlike other industrial sectors and aviation, maritime transport has not received free emission allowances.
Based on a price of 100 euros per allowance, the sector’s annual contribution would reach approximately 9 billion euros, according to the scenario used by ECSA. This is an estimate calculated using current emissions and the reference price used in the study, not a fixed revenue figure for every year.
The organization argues that a larger share of these resources should be allocated to funding the energy transformation of maritime transport itself, particularly given the cost differences between conventional fuels and sustainable alternatives.
According to data cited by ECSA, sustainable maritime fuels are, on average, four times more expensive than conventional fuels. This price differential is compounded by the costs of purchasing, installing, and operating new propulsion technologies and equipment intended to improve ships’ energy consumption.
The SMAP mechanism, proposed by the European Commission as part of the EU ETS revision, is designed to partially offset these economic differences by allocating emission allowances to shipping companies that use eligible fuels or certain zero-emission propulsion technologies. It is not a direct cash subsidy program, but an allowance allocation system whose economic value would help cover some of the additional costs.
The legislative proposal sets different coverage rates depending on the fuel or technology used. For biogas and advanced biofuels, it provides for compensating 55% of the remaining price difference compared with fossil fuels. For renewable fuels of non-biological origin, the proposed coverage is 90%, while for hydrogen and low-carbon fuels it is 80%.
The mechanism also provides for covering 90% of the additional costs arising from the deployment and use of zero-emission propulsion technologies, compared with conventional systems and in accordance with the emissions reductions achieved.
These compensations would be subject to the eligibility requirements set out in the legislation and the availability of allowances in the reserve. If applications for a given year exceeded the available volume, the proposal provides for a proportional reduction in allocations for all affected companies.
The ECSA study warns that the volume proposed by the Commission, spread evenly over the 13-year period from 2028 to 2040, amounts to approximately 8.5 million allowances per year, less than 10% of the approximately 90 million allowances that maritime transport must surrender each year, according to the association’s estimates.
To determine the mechanism’s needs, ECSA has developed a model based on estimated annual energy demand of 27.5 million tonnes of oil equivalent for maritime transport within the scope under consideration. The calculation incorporates projections for sustainable fuel use, price differences, technology costs, and the targets set out in the FuelEU Maritime Regulation.
The model also uses projections for the uptake of alternative fuels included in the impact assessment accompanying the proposal to revise the EU ETS. Based on these parameters, the association estimates that at least 330 million emission allowances would be needed through 2040, equivalent to around 33 billion euros if the hypothetical price of 100 euros per allowance used in its calculations is applied.
The study itself notes that the projections are subject to uncertainties related to future fuel prices, production capacity, actual use by shipping companies, and the costs of deploying the technologies. It also indicates that some aspects of the mechanism’s allocation methodology still need to be finalized.
In addition to increasing the reserve, European shipowners are calling for expanding the range of technologies eligible for support to include energy-efficiency projects capable of reducing fuel consumption and emissions from existing ships.
The association considers that the Commission’s approach provides an overly limited list of eligible technologies and calls for the mechanism to cover the various solutions that can contribute to emissions reductions, both across the operating fleet and on new ships.
ECSA Secretary General Sotiris Raptis has noted that maritime transport contributes close to 20% of the revenue raised through allowance auctions, despite accounting for around 10% of emissions covered by the system. He has also called on the European Parliament and the Council to expand the planned reserve and allow funding for energy-efficiency projects and other emissions-reduction technologies.
The Commission’s proposal also sets requirements concerning the origin of fuels and eligible technologies. As a general rule, it provides for them to be produced or manufactured in the European Union or in certain third countries that meet the conditions set out in the text. It also introduces exceptions for some maritime services linked to green corridors with ports outside the EU.
The legislative draft includes increases of five percentage points in certain compensations for maritime connections with islands, as well as additional bonuses when feedstocks of certain origins are used or eligible technologies are installed at shipyards in the European Union.
These provisions form part of the proposal COM(2026) 616 final, presented by the European Commission on July 17, 2026, which is now being considered by the European Parliament and the Council. The reserve of 110 million allowances and the conditions of the SMAP mechanism are therefore pending legislative approval.
