The EU Emissions Trading System (ETS) is a major policy tool of the European Union to reduce greenhouse gas emissions, aiming to combat climate change. For maritime operations, as a part of the EU's climate policy, EU ETS imposes a cap and trade system specifically tailored for the shipping industry. This system sets a cap on the total amount of greenhouse gases that can be emitted by ships operating in, to, and from the EU, and requires shipping companies to hold emission allowances corresponding to their emissions. These allowances can be bought, sold, or received for free, depending on the circumstances. This means, each tones of CO2 emitted poses a monetary value in the form of EU Allowances (EUA). In summary, EU ETS is the effort of EU to offset their carbon emissions. For each ton of CO2 emitted in EU, an EUA is surrendered. EU uses EUA’s to finance green initiatives to neutralize the CO2 emitted. EU ETS will apply to cargo and passenger ships of or above 5000 gross tonnage (GT) starting from 01.01.2024.
How Does EU ETS Affect Maritime Transportation
The integration of maritime activities into the EU ETS is a strategic move to encourage the shipping industry to reduce its carbon footprint. By necessitating the monitoring and reporting of carbon emissions, it compels shipping companies to be more accoun table for their environmental impact. This process involves detailed documentation of fuel consumption and subsequent emissions, fostering transparency and encouraging the adoption of more efficient operational practices.
EU ETS is designed to incentivize the maritime sector to invest in cleaner technologies and more efficient operational methods. Ships with lower emissions will require fewer allowances, leading to potential cost savings and a competitive edge in an environ mentally conscious market. The system also includes provisions for penalizing non compliance, thereby underscoring the importance of accurate and timely reporting of emissions. For instance, if a company emits 10,000 tonnes of CO2 falling within the scope of the EU ETS Directive during a reporting period, that company needs to buy and surrender 10,000 allowances by 30 September of the following year. Emission allowances are aucti oned, and companies can buy and sell them through secondary markets.
What Do We Do?
We calculate all ETS costs for you in two aims:
1- Estimation. We estimate your ETS Cost in a slightly difference before you complete your deal and bargain
for chartering & freight. It helps you to understand how ETS Cost affects your total expense.
2- Following up your ETS Costs and organizing payments in the name of you. Thus, you do not have to worry about your payment responsibilities towards European Union.
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