EU ETS 2026: When Your Carrier's Fuel Choice Becomes Your Compliance Problem

The EU Emissions Trading System (ETS) extended to maritime transport has reached a critical inflection point. From 1 January 2026, shipping companies must surrender allowances covering 100% of their CO₂e emissions on all EU-related voyages—up from 70% in 2025. But the truly significant change this year goes beyond carbon: methane (CH₄) and nitrous oxide (N₂O) now fall within the ETS scope for the first time.

This expansion has profound implications that reverberate throughout the supply chain.

Why Methane and N₂O Matter

While CO₂ has long been the focus of emissions accounting, the inclusion of methane and nitrous oxide represents a paradigm shift:

• Methane (CH₄): ~28x more potent than CO₂ over 100 years
• Nitrous oxide (N₂O): ~265x more potent than CO₂

For carriers that bet big on LNG as a "cleaner" transitional fuel, this is a wake-up call. LNG-powered vessels emit less CO₂ than heavy fuel oil counterparts, but methane slip—uncombusted methane escaping through the engine—can significantly erode that climate benefit. Even a small slip rate now directly increases compliance costs under the EU ETS.

The Carrier Fuel Strategy Divide

Major carriers have taken markedly different paths:

Each strategy carries different EU ETS exposure. Carriers with large LNG fleets now face higher surcharge demands unless they can demonstrate low methane slip rates or offset with bio-LNG.

What Shippers Need to Know

The inclusion of methane and N₂O sends a clear signal: fuel strategy is no longer just a carrier's internal ESG concern—it directly affects the surcharges you pay.

Shippers should:

• Audit carrier fuel mixes in their supply chain
• Request methane slip documentation from LNG-serving carriers
• Consider carrier selection as a lever for Scope 3 emissions reduction
• Budget for potentially volatile ETS surcharges through 2026 and beyond

The Infrastructure Gap

All these strategic choices raise a fundamental operational question: when vessels need to refuel, will ports actually be able to serve them?

• LNG: ~200+ ports with bunkering, but demand is outpacing supply
• Green Methanol: Only ~48 ports available globally—against hundreds for LNG

The mismatch between carrier ambitions and fuel infrastructure creates uncertainty that will shape decisions for years to---

The EU ETS 2026 expansion marks a new era where fuel choice equals compliance liability. Shippers who understand this shift will be better positioned to manage costs and meet their own decarbonisation targets.