The society is paying more and more attention to climate change as well as the environmental impact from the global supply chain and shipping industry, thus resulting in more and increasingly stringent environmental regulations in the shipping industry. Starting from January 1, 2024, the scope of European Union Emission Trading System (“EU ETS”) will be extended to maritime transport. This message serves to provide the details and the impact of EU ETS that you should know.

About EU ETS

The European Union Emission Trading System (EU ETS) is a program launched by European Union (EU) in 2005 to reduce greenhouse gas (GHG) emissions. Through its ‘cap and trade’ principle, a limit is set on the total amount of greenhouse gases that can be emitted by the companies covered by the system. Initially targeting energy-intensive industries and aviation transportation, the coverage of EU ETS will be extended to maritime transport, effective from January 1, 2024.

Under this expansion, cargo ships traveling within and to/from the European Economic Area (EEA), which encompasses the 27 EU nations, Iceland, Liechtenstein, and Norway, will be subject to the regulations of the EU ETS as follows.

Coverage of EU ETS in maritime transport:

  • 100% of the emissions at EU ports and 100% of the emissions on voyages between EU ports.
  • 50% of the emissions on voyages between EU ports and non-EU ports.

In addition, some aspects of EU ETS law are yet to be finalized, such as the list of ports considered as transshipment ports that will be published by the end of 2023 and may be reviewed every 2 years.

Effects and Emission Quantum

Under the EU ETS program, shipping carriers will have to surrender EU Allowances (EUAs) equivalent to their emissions. During the initial phase-in period, a portion of reported emissions need to be converted into EUAs as follows:

  • In 2024: for 40% of the reported emissions
  • In 2025: for 70% of the reported emissions
  • From 2026 onwards: for 100% of the reported emissions

The price of EUAs is variable and carriers are required to obtain them through auctions or the second-hand market.

Even taking into account our ongoing programs to reduce emissions, it is still inevitable that the EU ETS will generate additional costs connected to us and the whole industry. As a responsible party in the supply chain, cargo owners or shippers should be prepared to share this cost. OOCL will be introducing the Emission Quantum, effective January 1, 2024, on various affected service routes, including Asia-Europe, Intra-Europe, Trans-Atlantic, Europe-Latin America and Europe-West Africa. The quantum will be subject to monthly reviews in response to the latest EUA price and additional costs incurred in relation to EU ETS.

Below is the tariff (Emission Quantum):

Trade

Trade Bound

Dry (in EUR) per TEU

Dry (in EUR) per FEU

Reefer (in EUR) per TEU

Reefer (in EUR) per FEU

Asia-Europe

North Europe to

Far East

17

34

26

51

Far East to

North Europe

27

54

41

81

Mediterranean to

Far East

10

20

15

30

Far East to Mediterranean

19

38

29

57

Intra-Europe

North Europe to

North Europe

29

58

44

87

​South Europe to

South Europe

10

20

15

30

North Europe

to/from

South Europe

29

58

44

87

Trans-Atlantic

Canada to Europe

9

18

14

27

US to Europe

15

30

23

45

Europe to Canada

23

46

35

69

Europe to US

46

92

69

138

Latin America

& Africa

Europe to

West Africa

21

42

32

63

West Africa to Europe

21

42

32

63

Europe to Mexico

30

60

45

90

Mexico to Europe

30

60

45

90

Europe to

South America

11

22

17

33

South America

to Europe

11

22

17

33

Australia & New Zealand

North Europe to

Australia &

New Zealand

17

34

26

51

Australia &

New Zealand to

North Europe

27

54

41

81

Mediterranean to

Australia &

New Zealand

10

20

15

30

Australia &

New Zealand to

Mediterranean

19

38

29