New Energy World™
New Energy World™ embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low-carbon technologies.
Shipping set for major 2024 EU Emissions Trading Scheme bill
12/7/2023
News
Analysing the European Union Monitoring, Reporting and Verification (EU MRV) recently published dataset for shipping’s European CO2 emissions for the year 2022, Hecla Emissions Management estimates that the shipping industry could be liable for an EU Emissions Trading Scheme (EU ETS) bill of €3.1bn in 2024, €5.7bn in 2025 and €8.4bn in 2026.
The EU MRV regulation requires all ships exceeding 5,000 gross tonnes to collect and report data on CO2 emissions released to and from EU and European Economic Area (EEA) ports and will serve as the basis for shipping’s inclusion in the EU ETS from 1 January 2024.
Total ETS-applicable emissions for the maritime industry amounted to 83.4mn tCO2e in 2022, a modest decrease of 0.22% from 2021. At the current market value of €90 per emissions allowance (EUA), shipping emissions totalled €7.5bn for the year, reports Hecla Emissions Management, a company established by Wilhelmsen Ship Management (WSM) and Affinity Shipping in 2022 to assist shipping clients with each of the compliance obligations associated with EU ETS participation.
Taking into account the ETS phase-in period covering 40% of emissions in 2024, 70% in 2025 and 100% in 2026, Hecla estimates that the shipping industry could be liable for €3.1bn in 2024, €5.7bn in 2025 and €8.4bn in 2026.
The data shows emissions decrease across multiple shipping segments, including tankers, container ships, general cargo ships, reefers, roll-on/roll-off vessels (Ro-Ros) and chemical tankers. The container sector recorded the largest reduction, falling by 8.95%, equating to 2.3mn tCO2e saved.
However, passenger ships and LNG carriers logged substantial increases. The former scored highest, with a staggering 118% year-on-year rise equating to 2.8mn tCO2e, the latter recording a 63% increase equating to 2.1mn tCO2e.
Hecla points out that: ‘The changes in emissions levels are less reflective of improved environmental operations as they are of altered European trade patterns.’ LNG carriers, for example, saw a dramatic trading shift away from Asia towards Europe as Europe reduced its reliance on pipeline gas in the wake of Russia’s invasion of Ukraine, importing significantly more LNG by sea.
‘The projected liabilities emphasise the importance of shipping companies preparing for their entry into the ETS. We have been onboarding customers from across shipping’s value chain in order to have them fully prepared by the start of next year. We encourage more shipping companies to do the same,’ comments Hugo Wilson, Director of Hecla Emissions Management.
