Amendment of the Norwegian Greenhouse Gas Emission Trading Act and Regulations due to the ratification of the strengthened EU Emissions Trading System
In the wake of the amendments to the EU Emissions Trading System, the Norwegian Ministry of Climate and Environment initiated legislative work to amend the Norwegian Greenhouse Gas Emission Trading Act.
Before Christmas, the Government put forward a bill to the Norwegian Parliament, and on 5 December 2023, the Parliament consented to incorporate the strengthened EU Emissions Trading System into the EEA Agreement. On the first day of the year, these rules came into force in Norway.
Whereas the amendments to the Greenhouse Gas Emission Trading Act are largely overarching, the rules are specified in the Greenhouse Gas Emission Trading Regulations. Some of the consequences for the shipping industry are as follows:
- A duty is introduced to surrender greenhouse gas emission allowances from maritime transport. Maritime transport must surrender allowances covering 40% of its emissions in 2024, 70% of its emissions in 2025, and 100% of its emissions in 2026.
- For ships that stay in or travel between ports of call within the EEA these obligations apply in full, while for ships travelling between a port of call outside the EEA and a port of call within the EEA area there is a duty to surrender allowances representing half the sea route.
- To begin with, this applies only to carbon dioxide (CO2) emissions, but as of 2026, emissions of methane (CH4) and nitrous oxide (N2O) also fall within the scope of the law.
- Section 20 of the Greenhouse Gas Emission Trading Act establishes strict coercive measures against non-compliance. Foreign ships may be turned away or refused passage, and Norwegian ships may be detained. Further, intentional or negligent infringement may result in a fine or imprisonment for up to 3 months, and the companies may be subject to rectification orders, coercive fines and infringement penalties amounting to EUR 100 for each tonne of reportable greenhouse gas emissions for which no allowances have been surrendered.
Stakeholders in the shipping industry must acquaint themselves with how the regulations will affect their business, the deadlines that apply, how the purchase and reporting of allowances should be organised within the company, and they have to establish systems to ensure compliance.
In addition to the integration of maritime transport into the ETS, the EU has launched a parallel emission allowance system for buildings, road transport and additional sectors (ETS 2), mainly small industries not covered by the existing EU ETS. Like the ETS, ETS 2 will also be a “cap and trade” system; yet with the important difference that the ETS 2 will cover emissions from upstream activities. Thus, it will be fuel suppliers, rather than end users (such as households and car users), who will have to purchase and surrender emission allowances to cover their emissions. The ETS 2 will be fully operational from 2027, while the obligations to monitor and report emissions will already apply from 2025. However, the EU has stated that the implementation of the directive may be postponed to 2028 should the market experience “exceptionally high oil and gas prices” in 2026. Regarding the Norwegian implementation of the ETS 2, the Ministry of Climate and Environment has announced that they will come back to the Parliament should amendments to the Greenhouse Gas Emission Trading Act and Regulations be required.
Contact people
Published:
