One hundred and seventy euros ($173). That’s the price Danish carrier Maersk estimates clients will have to pay extra per feu on the Asia – Europe tradelane once a package of new European Union regulations kick in. For reefers, the extra charge is estimated on the same tradelane at EUR255.
In an advisory to clients, Maersk warned EU measures carry a large degree of extra-territoriality potentially affecting cargo moving outside of the EU’s borders.
On July 14 2021, the European Commission presented its Fit for 55 package. As part of several legislative proposals, the commission suggested including shipping in the EU emissions trading system (ETS), something that now looks very likely to happen.
The cost of compliance with the ETS will likely be significant
The commission’s ETS proposal follows vessels and not cargo. This means that it requires that shipping companies purchase allowances for: 50% of emissions from voyages departing from an EU port to a non-EU port; 50% of emissions from voyages departing from a non-EU port to an EU port; 100% of emissions from voyages between EU ports and 100% of emissions from ships at berth in an EU port.
This, in turn, determines the number of allowances which the shipping company must hand in at the end of the year. The commission proposes a phase-in period where shipping companies are required to hand in allowances corresponding to a percentage of their emissions. This phase-in means that shipping companies would be required to hand in allowances growing gradually from 20% of verified emissions in 2023 to 100% by 2026.
“The cost of compliance with the ETS will likely be significant therefore impacting the cost of shipping,” Maersk warned, explaining that it intends to apply these new charges as a standalone surcharge from the beginning of 2023.
Estimates of the ETS charges on a number of tradelanes are carried below.