The extension of the European emissions trading system to shipping was presented as a climate policy debate. For shipping companies, it has become an annual reporting and financial obligation, coupled with French administrative penalties that are now codified and a phase-in timetable that reaches its ceiling this year. The French Environmental Code, as amended by Law no. 2024-364 of 22 April 2024 and Law no. 2024-450 of 21 May 2024, and supplemented by Decree no. 2024-546 of 14 June 2024, now sets out its terms in domestic law. Here are the six points that determine, in practice, what the company must surrender, when, and what it risks if it does not.
1. The debtor is neither the ship nor the owner, but the shipping company
The Environmental Code introduced a new category alongside installation operators and aircraft operators. Article L. 229-7, in the wording in force since 1 January 2025, provides that at the end of each calendar year installation operators, aircraft operators and shipping companies surrender to the administrative authority, on pain of the penalties provided for in Article L. 229-10, a number of units equal to the total of their greenhouse gas emissions as reported, verified and validated. The notion of shipping company is not defined by French law: it is that of Regulation (EU) 2015/757 of 29 April 2015 on the monitoring, reporting and verification of emissions from maritime transport. It is therefore the person that has assumed responsibility for the operation of the ship within the meaning of that Regulation that bears the obligation, which does not necessarily coincide with the registered owner or with the charterer that decides the route and speed.
2. The scope is that of the MRV Regulation, with exclusions and a widening in 2026
Article L. 229-18-3, created by Law no. 2024-364 of 22 April 2024, defines the basis precisely. Surrender applies to the maritime transport activities covered by Article 2 of Regulation (EU) 2015/757, with the exception of the activities covered by paragraph 1a of that article and, until 31 December 2026, by its paragraph 1b. Above all, the text announces a widening whose financial effect is immediate: surrender takes into account carbon dioxide emissions and, from 1 January 2026, methane and nitrous oxide emissions. This extension primarily concerns ships powered by liquefied natural gas, whose apparent carbon footprint had until then been flattered by the absence of any account taken of unburnt methane. The same article also limits surrender to 50% of the emissions of voyages linking a Union port to a port outside the Union.
3. The phase-in reaches one hundred per cent this year
Article L. 229-18-4 sets the timetable, and it leaves no room for interpretation. Shipping companies surrender a number of allowances equal to 40% of total carbon dioxide emissions for calendar year 2024, then 70% for calendar year 2025, then all greenhouse gas emissions from calendar year 2026. The current year is therefore the first at full rate, and it combines two cumulative effects, the move from seventy to one hundred per cent and the entry of methane and nitrous oxide into the basis. The same article provides a limited transitional regime: until 31 December 2030, no account is taken of the emissions of voyages between a port of call located in an outermost region of a Member State and a port of call located in the same Member State. Lines serving the French overseas departments benefit from this window, which closes in four years.
4. The first sanction is not a fine, it is the freezing of the account
Article L. 229-10 organises a sanction whose practical effect often precedes the monetary penalty. It provides that the installation operator, the aircraft operator or the shipping company may not transfer the units recorded in the account associated with its maritime activities in the European registry, without prejudice to the surrender obligation, where it has failed to report the emissions resulting from its activities during the year before a date set by decree. A reporting delay therefore immobilises the company’s carbon assets, at the precise moment when it would need them to manage its purchases. The decision must be reasoned. For a company that has built up a position in allowances in anticipation of its obligation, this blocking is often worth more than the fine, since it prevents it from valuing or reallocating its units for the entire duration of the freeze.
5. The French procedure is written, and the fine is published
Decree no. 2024-546 of 14 June 2024 inserted into the regulatory part an Article R. 229-38-5 which describes the mechanics. Where a shipping company has not surrendered, by the set date, a sufficient number of allowances to cover the emissions of its maritime activities for the previous year, the national administrator of the European registry sends a report to the competent authority, indicating the number of missing allowances. On the basis of that report, the competent authority implements the measures provided for in II of Article L. 229-10. The text adds a detail that deserves the attention of legal and communications departments: decisions imposing an administrative fine are published on the website of the ministry responsible for the sea and notified to the shipping company. The sanction is therefore public by construction, which makes it a reputational as much as a financial risk, and a point to be addressed in the representation clauses of charterparties and financing agreements.
6. The allowance is movable property, with the consequences this entails
The legal characterisation of the compliance unit is often treated as a theoretical question. It is not. Article L. 229-11 provides that greenhouse gas emission allowances are movable property exclusively evidenced by an entry in their holder’s account in the European registry, that they are negotiable, transferable by account-to-account transfer, and that they confer identical rights on their holders. Three consequences follow. Ownership is proved by the entry and by it alone, which makes the keeping of the account critical. Transfer takes place by account transfer, so a contractual undertaking to transfer allowances does not amount to a transfer until the account transfer has taken place. And movable property may be pledged, seized or included in the estate in insolvency proceedings, which calls for explicit treatment in the security granted to financiers.
These six points form the regulatory side of decarbonisation, the one dealt with with the registry and the administration, while the economic allocation of the cost is negotiated elsewhere. The firm’s practical guide on shipping decarbonisation details the applicable regimes, the timetables and the clauses to update. Get the shipping decarbonisation guide. For an ongoing matter, the page devoted to maritime law sets out the firm’s working method and the contact form allows you to describe a specific situation.