EU Emission Trading System (ETS)

News

Borchard Lines Ltd

Emissions from shipping are to be included in the EU Emissions Trading System commencing from 1st January 2024. The emissions charges will be phased in with shipping companies being obliged to purchase emissions allowances (EUA’s) for 40% of their 2024 emissions, 70% of the 2025 emissions and full emissions thereafter.

This will result in higher operating costs since each tonne of fuel consumed emits about 3.2 tonnes of CO2 and the price for EUA’s in 2023 has traded between EUR 80 to EUR 100 per tonne of CO2 emitted. A recovery mechanism, similar in form to BAF will be introduced to cover the additional costs.

A manifested surcharge called ETS will be applied to all spot or long-term contracts, existing and new, to apply from 1st January 2024. The level of ETS will be notified each month together with the BAF with the initial ETS expected to be announced in mid-December.

Customers who are interested in reducing their emissions are invited to contact Borchard Lines to discuss opportunities for insetting and purchase of scope 3 emissions rights, which can also offset the ETS surcharges to be applied.

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