Carriers prepare for 2024 EU Emissions Trading System

The EU ETS is the world's largest emissions trading system, based on a “cap and trade” scheme:

• A maximum (cap) is set on the total amount of greenhouse gases that can be emitted by companies inside the EU area within a given year

• Companies subject to EU ETS have to buy allowances (quotas) based on the amount of greenhouse gases they emit (1 ton of CO2 = 1 ETS allowance)                                                           

From January 1st, 2024, carriers will be required to report their emissions and purchase an equivalent amount of allowances on the EU ETS market, according to a progressive schedule:

• in 2024, 40% of reported emissions will have to be converted into allowances

• in 2025, 70% of reported emissions will have to be converted into allowances

• from 2026, 100% of reported emissions will have to be converted into allowances

The ETS surcharge amount will be displayed separately* from the sea freight value. The charge will be based on a formula that combines EU ETS relevant CO2 emissions with market prices for EU Allowances (EUA) as follows:          

EU ETS-relevant CO2 emissions per TEU are based on the industry-aligned Clean Cargo methodology for CO2 calculation and consider the ETS regulatory framework condition. These are then multiplied by the market price for EUAs sourced from the ICEDEU3 Index using a three-month average. This results in the ETS surcharge amount per TEU which is updated quarterly. The impact of the new regulation will be visible from January 1, 2024, to retroactively pay for 40% of emissions in September 2025.

In the simplest terms, the applied ETS values will depend on the port-pair combination.                  

At Shypple, we're currently discussing ways to provide more information about these measurements and ensure that this adjustment minimally affects our customers' freight.