Maersk provided an overview of the latest developments regarding the EU Emissions Trading Scheme (ETS), expecting significant increase at the costs for shippers from January 2023.
In particular, Sebastian Von Hayn, Maersk’s Head of Network & Market Asia/EU noted that the proposals made during the last months. have played a key role in the logistics industry.
”Historically, new sectors joining the ETS have benefited from a gradual inclusion through several free allowances in the first years. The free allowances have unfortunately proven to be counter-productive and as such the European Commission has decided that shipping should not benefit from any. However, the European Commission proposes a phase-in period where shipping companies are required to hand in allowances corresponding to a percentage of their emissions.” he explained.
This phase-in means that shipping companies would be required to hand in allowances according to the schedule below:
- 20 % of verified emissions reported for 2023
- 45 % of verified emissions reported for 2024
- 70 % of verified emissions reported for 2025
- 100 % of verified emissions reported for 2026 and each year thereafter
The phase-in means that the carbon price per ton CO2 applied to shipping gradually increases until 2026.
Following recent updates with both European Parliament and the Council of the European Union both having adopted positions on the ETS proposal, the legislative process can enter the next phase, Sebastian Von Hayn said.
During this phase, the two institutions, together with the European Commission, need to reach a compromise before the proposal becomes legislation. Given the differing positions on elements such as the phase-in period, the percentage for voyages between EU and non-EU ports and when carbon pricing begins, as well as other non-logistics related issues these negotiations will take some time. We expect that political agreement can be reached towards the end of 2022.
He then continued explaining what these developments mean to Maersk customers:
”The cost of compliance with the ETS will likely be significant therefore impacting the cost of shipping. It is expected that the volatility of the European Union Allowance (EUA) traded in ETS may increase, as the revised legislation comes into effect. To ensure transparency, we plan to apply these costs as a standalone surcharge effective Q1 2023.”
Based on the latest developments, below are estimates of cost increases (in EUR) per FFE for selected trades with the following considerations.
- Price of the European Union Allowance (EUA) to be around EUR 90
- Obligation to purchase allowances is considered 100% since the ETS proposal version of the European Parliament abolishes the phase-in period
- Emissions of CO2, Methane and Nitrous oxide proposed in the assembly
