As of January 1, 2024, a new surcharge is added to maritime transport freight, called ETS, or “emissions surcharge.”
As sustainability becomes a more and more relevant objective, the EU will introduce its Emissions Trading System (ETS) on January 1, 2024, with a significant impact on the supply chain.
The European Emissions Trading System (EU ETS) aims to reduce greenhouse gas emissions by the European Union, a measure that is part of the “Fit for 55” package, a set of proposals to update legislation of the EU on climate, energy and transport.
GEOGRAPHICAL SCOPE OF THE ETS
The geographical scope for the new emissions surcharge is as follows:
The emissions surcharge will only be charged to reservations in which the loading and/or unloading port is located in EU/EEA (European Economic Area) countries, within the scope of the EU ETS.
50% of emissions from trips that start or end outside the EU.
100% of emissions from travel within the EU.
100% of emissions in EU ports.
The unit price of the Assignment/EUA is not fixed nor does it fluctuate daily, it is calculated quarterly, in accordance with regulatory regulations, which specifically determine how to calculate, report and pay for emissions. Carriers must follow this regulation and cannot decide on an alternative methodology for calculating responsible emissions in the EU ETS.
WHAT IS THE EU ALLOCATION (EUA) AND HOW IT AFFECTS THE EU ETS SURCHARGE
The EU ETS is the world’s first major carbon market. For every ton of CO2 reported, 1 European Union (EUA) Allocation from the EU ETS must be purchased.
It applies to all shipping companies, which are responsible for purchasing EUA.
There is a public index “EUA Futures” to calculate the emissions surcharge and to which shipping companies will adjust. This way, shippers have tools to plan the price of their supply chain.
Shipping companies will review and update the emissions surcharge quarterly. To do this, they will be based on the average price of the last 3 months for the European Union allocation (daily futures) using the public index indicated above.
The system is introduced under a gradual implementation model, that is, 40% of emissions in 2024 and 70% of emissions in 2025 will be subject to a carbon price. From 2026, all emissions (100%) will be subject to a carbon price. In addition to CO2 emissions, methane and nitrous oxide emissions from 2026 are included.
For more information you can visit the official EU ETS page of the European Commission.