Current regulations on shipping MRV will apply to any ship over 5,000 tonnes entering EU ports and means that emissions and fuel efficiency will have to be monitored and reported. At present, no allowances have to be surrendered against the verified emissions as shipping is not yet part of the EU ETS. However there is a good chance that sometime in Phase IV of the EU ETS it will be and pro-active companies are already considering what the financial impact will be.
EU Allowances (EUAs) are a form of carbon allowance used as the main currency in the EU Emissions Trading Scheme (EU ETS). The EU ETS is a form of Carbon Emissions Trading scheme whereby total emissions are capped and companies are allowed to freely trade carbon credits between themselves such that the lowest cost of reducing emissions to the cap is achieved. EUA carbon trading takes place globally but is centred on European countries and trading hours because that is where most of the trading interest and all of the physical hedging interest lies.