Tag Archives: emissions

Up to €1.5m per year: understanding the implications of EU ETS

The European Union (EU) has proposed an Emissions Trading Scheme (ETS) including maritime emissions. The hope is to reduce maritime pollution from greenhouse gas emissions by forcing emitters to buy emission certificates. The current cost of the certificates is about 90 Euros; futures can be tracked here. The first monitoring year will be 2024, and will cover:

  • all emissions from vessels above 5000 GT calling at EU ports for voyages within the EU
  • 50% of emissions from voyages that start or end outside the EU
  • all emissions when berthed at an EU location.

The rules will apply to smaller vessels in the following years. The basis for the requirement will be an EU Monitor, Report and Verify (MRV) analysis.

The emissions certificates are going to make ocean shipping more expensive. That’s exactly what is intended. The idea is to internalize the cost of pollution rather than have it be a factor exogenous (in economic terms) to the negotiated rates for shipping. Essentially shippers and carriers will no longer be able to ignore their emissions; they will need to pay enough to cover the cost of the certificates, or use clean ships.

Some carriers have already announced plans to pass the charges through to the shippers. Whatever happens, the emissions cost, measured by the certificate value, will be added to the cost of the product. This should influence shipping markets to reduce emissions. It’s an important stem, and one virtually all economists support.

One can argue whether the price is fair, or enough to completely cover the cost. And one can argue that passing through the cost to shippers stokes inflation. And there’s a question whether a charterer or owner should pay for the certificate, since the charterer has control of the factors on voyages that generate the emissions. But these are smaller points compared to getting action on reducing emissions. And now competition will be extended to reduce emissions for voyages, since ships that don’t pollute will be favored with lower costs.

The Managing Director of software company zero44 interviewed here, Frederike Hesse, says that the cost could well be substantial in the next few years. So shipowners had better prepare. Her company seems to be supplying software for charter planning. Emissions will play a definite role in charter planning and pricing for ships visiting the EU.

Friederike Hesse | Mar 02, 2023

Up to €1.5m per year: understanding the implications of EU ETS

Not enough SAF for air cargo to hit net zero – carriers must find other routes

It’s becoming obvious that there’s no way that enough sustainable aviation fuel (SAF) can be produced to meet the needs of air traffic.

Carriers are already suggesting they will need to play a little use in their path to ‘Net-Zero’ emissions. They plan to take advantage of strategies which allow them to keep emitting but using offsets with technologies that have been declared legitimate to shelter fuel use.

Such technologies concern purchasing carbon credits and developing carbon capture sources. But those do not actually reduce the emissions from air traffic.

I’m interested by what Glen Hughes, the director general of The International Air Cargo Forum (TIACA) said for the article below.

“What’s important is the capacity to monitor a company’s total ESG impact and activities in a manner that fulfils audit requirements and has a direct impact on investment decisions by equity firms and banks.”

Source: Loadstar Article

Clearly this sidesteps serious ESG improvement for the industry and promotes a form of gaming the rules.

Promoting watered-down audit requirements and shaping how investment decisions are made by large investors clearly takes precedence over actually improving emissions. The premise that investment firms and auditors are to determine the world’s response to environmental improvement is patently ridiculous. TIACA is promoting a specious response. A harsh judge could call it a form of greenwashing.

To be fair, I will quote Mr Hughes again, from the same article, citing six questions to answer for supply chain officials:

 “Am I being as environmentally responsible as I can? Am I using recyclable materials? Am I optimising transport? Am I using sustainable energy or compensating for emissions? Am I supporting global prosperity and economic growth? And how can I, my partners and supply chain stakeholders continually improve?”

Source: Loadstar Article

Compensating for emissions is a big loophole. And if you use the loophole, are you being as environmentally responsible as you can be?

Leaving it to investors and politicians to decide does not seem like a wise course.

By Alex Whiteman 20/02/2023

Not enough SAF for air cargo to hit net zero – carriers must find other routes – The Loadstar

Xeneta green scheme names and shames box line heroes and villains

Xeneta has developed a new index to describe the CO2 emissions by major container shipping companies on specific trade lanes. The index names Hamburg Sud as a hero and Evergreen as a villain currently.

Unlike the IMO’s CII the index estimates CO emissions per unit of cargo, which may be a better measure for carriers to work on. It also lets Xeneta make a statement on how the line got their result.

For instance, Hamburg Sud got their good result mainly by slow steaming.

Here’s what Xeneta had to say about how the index is calculated:

“The CEI methodology, she explained, is based on data from Marine Benchmark and calculated based on AIS data, including speed, combined with modelled factors, such as weather data, loading.”

Source: article linked below.

We’ll want to follow this CEI index over time. Over time Xeneta gives us a graphical picture of several entities on the America East Coast trade. Here we see how various carriers and consortia are able to manage CO2 emissions via the CEI.

By Charlie Bartlett, technology editor 09/02/2023

Xeneta green scheme names and shames box line heroes and villains – The Loadstar