With the recent introduction of the Fit-for-55 package, the EU has become the first major regulator to enact binding measures targeting emissions from international maritime shipping outside of the International Maritime Organization (IMO).

The study aims to address two primary questions: (1) How can the EU's ambitious policies have flow-through effects on emissions and outcomes in third countries? and (2) How can the EU facilitate policy diffusion to support emissions reduction in the maritime sector of non-EU countries? To answer these questions, the report analyses key elements of the EU Emissions Trading System (EU ETS) expansion to the maritime sector and the FuelEU Maritime proposals. It identifies relevant countries in the maritime sector where EU policies could have an impact and examines the consequences of these changes on third countries.

The assessment draws from existing literature and insights gained from expert workshops, with a focus on capacity building, cooperation, and an equitable transition. Based on this analysis, the report puts forward several recommendations. These include strengthening its own new regulations to close loop-holes – from allowing for fossil fuels to remain in the shipping fuel mix (mainly LNG), enacting stricter emission intensity reduction targets and increasing non-compliance penalties, supporting green shipping corridors to facilitate partnerships with third countries, and supporting neighbouring countries in developing their zero-emission fuel, technology and infrastructure capabilities.

Furthermore, the paper emphasizes that the best course of action is for the EU to push for greater ambition at the IMO for globally agreed measures, especially market-based measures, while working towards an equitable transition through financial support, capacity building, and cooperation, particularly for vulnerable Least Developed Countries (LDCs) and Small Island Developing States (SIDS). It suggests using a portion of the revenues generated from the EU ETS to support decarbonization efforts in third countries, with Green Shipping Corridors as one away to support, while engaging with international partners at all levels.