What is EU-ETS?

The European Union has decided to include shipping in the EU Emission Trading System (EU ETS).

The EU-ETS is a system that creates financial incentives for companies to continuously reduce their GHG emissions. Emissions are priced and only those who avoid them can save emission costs. However instead of charging GHG fees, a cap-and-trade system has been implemented using proven market mechanisms. Emission rights are needed to legally emit greenhouse gases (GHG).

These emission rights are referred to as EU Allowance (EUA). One EUA entitles for the emission of one metric ton GHG. These EUAs are to be procured on the free market (exchanges, auctions and over-the-counter). The EU controls the issuance of EUAs through a targeted cap to keep the EUA price at a level that makes it worthwhile to reduce GHG emissions on the one hand and sell unused EUAs on the other hand. Unlike other industries ashore, which receive an annual free allocation of EUAs, ship operators must buy all EUAs they need.

Read more about the EU-ETS below and in our info brochure, or get in touch with us:

BBC Chartering GmbH & Co. KG
Hafenstraße 12
26789 Leer

Phone +49 491 925 20 90

How do the EU ETS costs affect the freight?

By operating the world’s largest MPP fleet, the BBC APAC (any port any cargo) concept enables the flexible scheduling of our ships to transport our customers’ cargo reliably, on time and at the right price. Once the agreement has been reached, the cargo owner does not have to worry about which ship is transporting the cargo via which route and what the associated costs are.

Consequently, the EU-ETS costs are also included in this concept. These costs are our costs and the freight agreed with the customer applies. Subsequent billing or administratively complex emission accounting do not apply.

For time charters and COAs we agree with our customers, individually and case-by-case, an EU-ETS surcharge. This is based on a transparent emission calculation and considers the actual EUA price as well as the future price development similar to a bunker adjustment factor.

How is a “voyage” defined
in terms of the EU-ETS?

From a commercial perspective a voyage may include a series of ports being called. However, in terms of the EU ETS regulations a voyage is only the passage from one port to another. Thus, for an overseas voyage towards the EU, it is the leg from the last port prior entering the EU, that needs to be considered for the EU ETS emission monitoring.

Why not call a port close to the EU for bunkers, crew change etc. to shorten the leg that accounts for CO2 emissions?

A port of call is defined by the regulation as a port where a cargo ship stops to load or unload cargo. The call for any other purposes would not qualify as a “port of call”. Consequently, the mere call for dry-docking in an EU port, or the sole Kiel Canal transit, would not cause EU ETS emission costs.

Would a transshipment of cargo in port close but outside of the EU be beneficial?

The idea is tempting: Simply tranship your overseas cargo at a port close but outside of the EU and you will only have to consider the CO2 emitted on the rather short leg from this transshipment port to the EU destination. However, the emission costs saved would not cover the additional costs e.g. port fees, stevedoring and creates further exposure with regards to cargo damages, documentation, transit times.

For the container ship segment special regulations apply, to prevent such evasive behaviour.