The EU Emissions Trading System (EU ETS) is the EU’s cap-and-trade scheme for reducing greenhouse gas emissions. It sets a limit on emissions and obliges companies to surrender EU Allowances (EUAs) to meet compliance obligations.

Ships over 5,000 GT operating in EU waters must monitor, report, and surrender allowances. Ships over 400 GT must monitor and report, with surrendering obligations to be reviewed in 2026.

The shipowner holds the obligation unless the ISM DOC holder has agreed in writing to take it on.

A Maritime Operator Holding Account (MOHA) is required for compliance. A Trading Account is optional and has the same functionality as the MOHA, with the exception of being able to surrender allowances. Everybody can open a Trading Account, whereas a MOHA can only be opened by companies with a surrender obligation to an EU member state.

Yes — Grey Epoch can arrange transactions and deliver allowances directly to a third party or to your account once it is open.

Yes — EUAs can be transferred to other accounts, including those of your clients and counterparties.

A port of call is the port where a ship stops to load or unload cargo, to embark or disembark passengers, or where an offshore ship stops to relieve the crew. Exclusions exists for refuelling and drydock, amongst other things. 

Operators failing to surrender sufficient allowances face a penalty of €100 per tonne of CO₂ emissions not covered, plus liability to purchase the missing allowances retrospectively. Repeat violations may result in vessel detainment or restrictions on port entry.

Emissions must be allocated to the period in which they occur. Operators should track fuel use daily or per voyage segment to ensure accurate reporting for each reporting period.

The EU has expressed its intention to avoid double-charging for the same emissions. No guidance has been set out but EU ETS costs might act as a minimum price, with possible adjustments or discounts if IMO measures apply. More clarity to be expected during the EU ETS 2026 review.

From 2027 aircraft operators will no longer receive any free allocations.

By using forward contracts to secure prices in advance and timing purchases to benefit from favourable market conditions.

During the ETS review, the EU will assess if CORSIA efforts are in line with the Paris Agreement. If it’s determined CORSIA isn’t sufficiently strong, the EU might consider ending the “stop-the-clock mechanism” and start bringing departing extra-EU flights into scope. Currently, only flights both departing and arriving from EEA countries are in scope (with some inclusions for Switzerland and the UK).

The Carbon Offsetting and Reduction Scheme for International Aviation — a global programme to offset CO₂ emissions from international flights.

Airlines operating on international routes in participating countries must offset emissions growth beyond 2019 levels.

There are no confirmed plans, but alignment or integration is possible in the future.

You must buy CORSIA credits if your airline operates international flights between States that are participating in the scheme for that year, your annual CO₂ emissions from those covered flights exceed 10,000 tonnes, and those emissions are above the phase’s baseline—set at 2019 levels for the pilot phase (2021–2023) and at 85% of 2019 levels from the first phase (2024–2026) onward.

Participation by States is voluntary during the pilot and first phases, so your obligation depends on whether both the departure and arrival States have opted in for that year; in the second phase (2027–2035), participation is based on ICAO criteria plus any additional voluntary participants.

Your administering authority will confirm your coverage and the volume of credits you must surrender.

You can buy CORSIA credits from approved CORSIA carbon credit projects, Grey Epoch can help you source credits that meet both compliance and sustainability objectives.

Yes, airlines must use an approved CORSIA Emissions Unit Account  to hold and track CORSIA credits.

Credits are issued by approved providers, deposited into the account, and then surrendered to offset emissions above the 2019 baseline.

The account ensures proper verification, prevents double-counting, and facilitates compliance reporting to the International Civil Aviation Organization (ICAO).

Yes, CORSIA credits have a validity period. Only credits issued for eligible years under the scheme can be used for compliance, so airlines must ensure they use credits within the allowed timeframe to offset their emissions.

The EU will review ETS rules in 2026 — changes may affect free allocation, overall supply, expansion of the ETS scope, and compliance obligations.

Gradually from 2026, ending by 2034 for most sectors. In line with the phase-in of the Carbon Border Adjustment Mechanism (CBAM).

You can sell them on the market or hold them for future compliance. Grey Epoch can help monetise surplus EUAs through competitive market access and create opportunities for periodically recurring income from excess holdings — without compromising future compliance flexibility.

Grey Epoch can provide financing for your allowances. By providing EUAs as collateral you’re able to achieve more attractive financing rates, generally between 2%-5%.

One popular method is using forward contracts — buying now for future delivery and payment means you fix the price now, with the bulk of the payment and delivery at a date further into the future. This allows you to fix the price, without the full upfront costs. Additionally, can also enter into bespoke risk management structures that protect you from prices rising above a certain level.

• Spot purchases – buying allowances at the current market price for immediate delivery.

• Forward contracts – agreeing now on a price for delivery in the future, protecting against possible price rises.

• Limit orders – setting a maximum or minimum price you are willing to pay so purchases only happen within your set budget.

• Bespoke orders  - we develop procurement structures and strategies that fits your specific needs, from reducing volatility and optimising cash flows to lowering costs and generating income.

Operators failing to surrender sufficient allowances face a penalty of €100 per tonne of CO₂ emissions not covered, plus liability to purchase the missing allowances retrospectively.

A separate ETS starting in 2027 for fuels used in road transport, buildings, and smaller industries.

They cover different sectors, use separate allowances, with different supply and demand mechanics. Although also a cap-and-trade system, it works Fastly different from the original ETS.

The following fuel suppliers are regulated under the EU ETS 2:

1. Authorised keepers of tax warehouses liable for excise duty, mainly covering liquid transport fuels.

2. If this does not apply, any person liable for excise duty on natural gas or solid fuels — including those exempt from paying (e.g. household coal suppliers) who must still register with national authorities.

3. If neither applies, Member States may designate another responsible party, for example where multiple persons are jointly liable for the same excise duty or where national systems require a different point of obligation

• End consumers are in scope when fuel is released for consumption by an ETS2-regulated supplier and the activity is not already covered by ETS1. Coverage is based on Common Reporting Format (CRF) categories from the IPCC 2006 Guidelines:

• Buildings – CRF 1A4a (commercial/institutional) & CRF 1A4b (residential): space/water heating, cooking, small equipment and off-road tools used in these settings.

• Road transport – CRF 1A3b: cars, motorcycles, vans, lorries, buses.

• Energy industries not in ETS1 – CRF 1A1: small power/heat plants, refineries/coke ovens and other combustion where the installation is outside ETS1.

• Manufacturing & construction not in ETS1 – CRF 1A2: on-site combustion for heat/electricity and mobile/off-road machinery, plus head-office energy use for these firms.

Member-State opt-ins – Article 30j: any additional sectors a country adds to ETS2.

The ETS 2 will have a soft price cap of €45 (inflation adjusted) per tonne of CO₂. If the average allowance price exceed this level for a predefined amount of time, additional allowances can be released from the Market Stability Reserve. The mechanism will be reviewed in 2030.

The €45 trigger is inflation-linked at 2020 prices. When the EU ETS starts, this means the cap might already exceed €55. Further changes may be reviewed periodically by EU regulators as part of ETS 2 updates.

The annual compliance cycle is as follows:

• Jan-Dec: Monitor emissions.

• April 30th: From 2026 - submit verified annual emissions report for previous year’s emissions.

• April 30th: From 2028 – report on average share of carbon costs passed on to consumers in the previous year.

• May 31st: From 2028 - surrender allowances for previous year’s emissions.

• July 31st: Submit possible improvements to Monitoring Plan (deadline extension to September possible).

Yes, certified biofuels may reduce or remove the obligation to surrender allowances.

• In Scope – Biofuels, including biodiesel, fall under ETS 2 because they are supplied for use as motor or heating fuels, even though they are derived from biological sources.

• Zero-Rating – When a biofuel meets the sustainability and greenhouse gas savings criteria set out in the Renewable Energy Directive (RED II), its emissions are treated as zero, meaning no allowances need to be surrendered.

• Proof Required – To qualify for zero-rating, operators must provide documented evidence that the fuel complies with RED II sustainability standards.

The ETS 2 scheme itself starts in 2027, so primary compliance purchases aren’t yet possible. However, for those comfortable with derivatives, futures contracts are already available on exchanges, allowing early market exposure and hedging ahead of the scheme’s launch.

No — the two systems will have separate allowances.

The EU Emissions Trading System (EU ETS) is the world’s largest carbon market, designed to reduce greenhouse gas emissions through a cap-and-trade mechanism.

Companies in covered sectors are required to hold allowances for every tonne of CO₂ they emit. These allowances can be traded, creating a market price for carbon.

By tightening the cap each year, the EU ETS incentivises businesses to reduce emissions cost-effectively while driving investment in low-carbon technologies.

The UK ETS was introduced in 2021 after the UK left the European Union, replacing the UK’s participation in the EU ETS. While both systems operate under the same cap-and-trade principle, the UK ETS has its own allowance units (UKAs), rules, and compliance deadlines.

Compliance with ETS rules applies to industries with significant greenhouse gas emissions. In the EU ETS, this includes power generators, energy-intensive industries, and aviation operators.

The UK ETS covers similar sectors, and is set to expand to shipping and fuel suppliers. Businesses in these categories must monitor, report, and surrender allowances equal to their annual emissions.

EU Allowances (EUAs) and UK Allowances (UKAs) are the tradable units used in their respective systems.

One EUA or UKA represents the right to emit one tonne of CO₂ (or equivalent greenhouse gases).

Grey Epoch provides businesses with direct market access, expert advisory, and structured trading solutions that reduce the overall cost of compliance. Our clients typically achieve up to 40% savings in trading fees compared to traditional brokers. By leveraging forward procurement, tailored price risk management, and cash flow optimisation strategies, we help companies secure allowances at competitive prices, smooth out market volatility, and align carbon purchasing with budget needs. With over 18 years of ETS experience, Grey Epoch ensures your business stays compliant while minimising costs.

There is a financial penalty per missing allowance (e.g., €100 per tonne in the EU, plus inflation adjustments).

Yes. Businesses that operate in both the European Union and the United Kingdom may be required to comply with two separate carbon markets.

Companies must monitor emissions, purchase allowances, and surrender them under both schemes independently.

A separate ETS starting in 2027 for fuels used in road transport, buildings, and smaller industries.

They cover different sectors, use separate allowances, with different supply and demand mechanics. Although also a cap-and-trade system, it works Fastly different from the original ETS.

The following fuel suppliers are regulated under the EU ETS 2:

1. Authorised keepers of tax warehouses liable for excise duty, mainly covering liquid transport fuels.

2. If this does not apply, any person liable for excise duty on natural gas or solid fuels — including those exempt from paying (e.g. household coal suppliers) who must still register with national authorities.

3. If neither applies, Member States may designate another responsible party, for example where multiple persons are jointly liable for the same excise duty or where national systems require a different point of obligation

• End consumers are in scope when fuel is released for consumption by an ETS2-regulated supplier and the activity is not already covered by ETS1. Coverage is based on Common Reporting Format (CRF) categories from the IPCC 2006 Guidelines:

• Buildings – CRF 1A4a (commercial/institutional) & CRF 1A4b (residential): space/water heating, cooking, small equipment and off-road tools used in these settings.

• Road transport – CRF 1A3b: cars, motorcycles, vans, lorries, buses.

• Energy industries not in ETS1 – CRF 1A1: small power/heat plants, refineries/coke ovens and other combustion where the installation is outside ETS1.

• Manufacturing & construction not in ETS1 – CRF 1A2: on-site combustion for heat/electricity and mobile/off-road machinery, plus head-office energy use for these firms.

Member-State opt-ins – Article 30j: any additional sectors a country adds to ETS2.

The ETS 2 will have a soft price cap of €45 (inflation adjusted) per tonne of CO₂. If the average allowance price exceed this level for a predefined amount of time, additional allowances can be released from the Market Stability Reserve. The mechanism will be reviewed in 2030.

The €45 trigger is inflation-linked at 2020 prices. When the EU ETS starts, this means the cap might already exceed €55. Further changes may be reviewed periodically by EU regulators as part of ETS 2 updates.

The annual compliance cycle is as follows:

• Jan-Dec: Monitor emissions.

• April 30th: From 2026 - submit verified annual emissions report for previous year’s emissions.

• April 30th: From 2028 – report on average share of carbon costs passed on to consumers in the previous year.

• May 31st: From 2028 - surrender allowances for previous year’s emissions.

• July 31st: Submit possible improvements to Monitoring Plan (deadline extension to September possible).

Yes, certified biofuels may reduce or remove the obligation to surrender allowances.

• In Scope – Biofuels, including biodiesel, fall under ETS 2 because they are supplied for use as motor or heating fuels, even though they are derived from biological sources.

• Zero-Rating – When a biofuel meets the sustainability and greenhouse gas savings criteria set out in the Renewable Energy Directive (RED II), its emissions are treated as zero, meaning no allowances need to be surrendered.

• Proof Required – To qualify for zero-rating, operators must provide documented evidence that the fuel complies with RED II sustainability standards.

The ETS 2 scheme itself starts in 2027, so primary compliance purchases aren’t yet possible. However, for those comfortable with derivatives, futures contracts are already available on exchanges, allowing early market exposure and hedging ahead of the scheme’s launch.

No — the two systems will have separate allowances.

The voluntary carbon market (VCM) allows companies and organizations to purchase carbon credits beyond regulatory requirements, often as part of broader sustainability or net-zero commitments. By supporting high-quality projects, companies can compensate for unavoidable emissions while demonstrating climate leadership.

Not all credits are created equal, which is why quality matters. At Grey Epoch, every credit we source is vetted against internationally recognized standards such as Verra’s Verified Carbon Standard and the Gold Standard. All credits are recorded in public registries, ensuring transparency and confidence that each credit represents a genuine, additional, and verifiable reduction in greenhouse gas emissions.

Yes. Verified voluntary carbon credits are widely used within ESG and sustainability reporting frameworks.

They allow corporations to complement internal emission-reduction strategies and demonstrate accountability to stakeholders, investors, and customers.

Grey Epoch helps clients integrate these credits into sustainability roadmaps in alignment with evolving disclosure standards.

The voluntary market includes a wide range of project types, such as:

• Forestry & land use (reforestation, avoided deforestation)

• Renewable energy (solar, wind, hydro)

• Methane capture & waste management

• Energy efficiency & clean cookstoves

• Through Grey Epoch Group, we connect clients to projects that deliver not only carbon reductions but also broader benefits, including biodiversity conservation, sustainable development, and clean energy access.

The VCM is used by corporations, investors, NGOs, and even individuals. Many Fortune 500 companies leverage it to meet net-zero or carbon-neutral goals, while smaller businesses participate to demonstrate climate responsibility and strengthen their brand.

Compliance markets are government-regulated and require covered entities to buy allowances or credits to meet legal obligations.

The voluntary market, by contrast, is not mandated by law—companies choose to participate to achieve sustainability goals, improve ESG scores, and respond to customer and investor expectations.

At Grey Epoch, we act as a trusted partner, helping clients navigate the voluntary market, source high-quality credits, and align offsetting strategies with sustainability and reporting frameworks. We simplify the process of selecting projects and ensure every credit meets rigorous quality and transparency standards.

Yes. Many projects deliver additional positive impacts, such as biodiversity protection, job creation, improved air quality, and community development. At Grey Epoch, we help clients choose credits that align with their climate strategy and corporate values.

Risks include double counting, poor project verification, and credits from projects that don’t deliver long-term impact. Grey Epoch mitigates these risks through due diligence, strict adherence to recognized standards, and ongoing monitoring of the credits we supply.

A GO certifies the production of one megawatt-hour (MWh) of renewable electricity, providing consumers and businesses with confidence in their renewable electricity claims. GOs underpin disclosure frameworks and renewable energy tracking in Europe.

Each GO includes detailed metadata such as generation technology, location, and vintage, with tracking through official registries preventing double counting.

They are essential for accurate Scope 2 emissions reporting, allowing organizations to claim renewable electricity consumption reliably.

GOs are tradable across interconnected European registries, supporting cross-border market liquidity and renewable energy sourcing.

CCAs represent the right to emit one tonne of CO₂-equivalent under California’s cap-and-trade program, which has been instrumental in reducing state emissions by over 15% since 2013.

Allowances can be purchased via futures and options on regulated exchanges, as well as over-the-counter through brokers like Grey Epoch.

• Large emitters: Facilities in electricity generation and major industrial sectors emitting ≥ 25,000 tCO₂e/year must participate.

• Fuel suppliers: Distributors of transportation fuels and natural gas are included (added in 2015).

• Optional participation: Smaller emitters in covered sectors can opt in voluntarily to participate in the market.

They complement California’s Low Carbon Fuel Standard and other climate initiatives, collectively supporting the state’s ambitious carbon reduction targets.