ETS Emissions Scheme Leading to Surcharges

October 06, 2023

ETS Emissions Scheme Leading to Surcharges

 

During the past few days, we have received various notifications from ocean freight carriers, that there will be surcharges introduced from January to cover the increased requirements of the EU’s Emissions Trading System.

While the January surcharge will be linked to varying factors, the level of the surcharge will not be confirmed until at least November. However, early indications from carriers suggest this will range between $10 and $45 per TEU, depending on the carrier and trade. Thereafter, it is likely to be reviewed quarterly.

Carriers are required to meet new ETS requirements from January 1st, at which time they will effectively pay a contribution for every ton of CO2 emitted by their vessels. Each steamship line will be required to report their emissions and purchase allowances, which will become progressively tougher.

 

  • in 2024, 40% of emissions to be converted into allowances.
  • in 2025, 70% of emissions to be converted into allowances.
  • from 2026, 100% of emissions to be converted into allowances.

In the fight against global warming, the EU adopted a legal action plan to reach carbon neutrality by 2050, with an interim objective to reduce greenhouse gas emissions by 55% before 2030, and the ETS forms part of that plan.

Set up in 2005, the EU’s ETS system is the world’s largest emissions trading system, based on a “cap and trade” scheme. The number of allowances available EU-wide decreases every year, reducing the total greenhouse gases emitted in line with the 2030 and 2050 targets.

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