The International Transport Intermediaries Club (ITIC) has forecasted that the cost of the European Union’s (EU’s) new Emissions Trading Scheme (ETS) to the shipping industry could be in the billions.
ccording to ITIC the extended EU ETS, which comes into force on 1 January 2024, will set an annual absolute limit on emissions of greenhouse gases (GHG) for vessels of 5,000 gt and above calling at EU ports.
However, its implementation is creating tensions between shipowners and charterers, particularly surrounding the language within charter agreements to ensure a fair distribution of costs and legal risks, ITIC notes.
Despite these challenges, Robert Hodge, General Manager at ITIC, noted that it is vital that ship managers take necessary due diligence to ensure any of these risks are mitigated.
The EU ETS is likely to cost the industry billions in extra fees so ship managers and charterers should assess every aspect of the costs and legal risks associated with the scheme to ensure they are not left in a financial precarious position
… said Robert Hodge
ITIC’s warning comes on the back of the most recent meeting of BIMCO’s documentary committee, which includes ITIC and other shipping stakeholders. During the meeting, BIMCO adopted a groundbreaking ETS allowances clause for its ship management agreement, SHIPMAN, and three ETS clauses tailored for voyage charter parties.
These clauses were crafted to facilitate compliance with evolving regulations, offering a strategic approach to navigating the changing nature of carbon emissions in the maritime sector.