Shipping: EU ETS Will Redefine Industry Standards

Shipping is about to enter a new period of structural reforms, as a result of the implementation of the EU ETS across the industry, starting next year. In its latest weekly report, shipbroker Intermodal said that “as 2024 approaches, the maritime industry is poised for a significant transformation with the integration of the European Union’s Emission Trading System (EU ETS). This change represents more than a regulatory update; it redefines industry standards. The EU ETS, with its plan to release about 80 million Emission Unit Allowances (EUAs) into the market, is a pivotal step towards stringent carbon regulation aimed at reducing emissions by 55% by 2030”.

According to Intermodal’s, Ms. Chara Georgousi, Research Analyst, “shipping companies are set to encounter a phased compliance requirement, starting with 40% allowance submission in 2024, escalating to 70% in 2025, and achieving 100% by 2026. The economic implications are substantial, with the sector potentially incurring costs between EUR 8-10 billion by 2026. The carbon pricing within the EU ETS noted for its volatility, will significantly shape the operational costs (OPEX) of fleets and investment strategies. Companies must strategically manage their carbon footprint and adjust to the evolving cost landscape of emissions allowances. Factors like regulatory changes, auction supply, and environmental targets will greatly influence these prices. On top of that and against this backdrop of high volatility, the EU ETS is on the brink of significant changes that will notably influence operational costs and investment strategies. In a pivotal shift confirmed by the European Commission’s adopted regulation, still awaiting formal approval by the EU Council and Parliament, the EU ETS will see its annual compliance deadline for stationary installations and the aviation sector change from 30 April to 30 September 2024. This adjustment is expected to disrupt the conventional EUA pricing patterns. Rather than the typical spring increase in EUA prices, a transition towards a summer price rally is now anticipated, which could markedly alter trading dynamics and affect market liquidity”.

Intremodal’s analyst said that “for shipowners, these revised deadlines present new challenges. They must adjust to this new timeline for acquiring and surrendering carbon allowances, which could have substantial effects on their financial planning and budgeting for emissions costs. This change in deadlines may also result in fluctuations in market prices, necessitating a revision in carbon management strategies to adapt to these new market dynamics. The global maritime industry is closely watching this integration, recognizing its potential to set a precedent for similar sustainability measures worldwide. This change is part of a broader shift towards sustainability, where effective carbon footprint management becomes a critical business metric”.

“As the maritime industry transitions into this new regulatory era, it’s imperative to have robust support and guidance. Our Intermodal ESG Solutions department is dedicated to assisting our clients through these changes, offering comprehensive consultancy and training services in compliance facilitation, emissions tracking, reporting accuracy, and operational efficiency. With over six decades of combined experience in shipping, EU ETS regulation, EUA trading, and risk management, our team is uniquely positioned to provide strategic guidance and support. We are committed to ensuring that our clients are not only compliant with the new regulations but are also proactive, innovative, and leaders in sustainable and ethical business practices. Our goal is to accompany our clients on this journey, equipping them with customized strategies for effective carbon footprint management and EUA acquisition, fostering a sustainable and responsible maritime future”, Ms. Georgousi said.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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