3 steps to predict the carbon cost exposure of your shipping programme
If you’re a mid size charterer or owner you can expect an added carbon cost of approximately 10 million USD to your freight costs, once shipping enters the EU ETS. Do you know the carbon cost exposure of your chartering activities? We've outlined three steps that will allow you to predict the 2024 EU ETS cost of your chartering activities.
The full storyThe EU ETS requires shipping companies to annually report emissions and surrender allowances. The polluter pays principle mandates that charterers, in time charter and spot voyage contracts take responsibility for emissions. This highlights the importance of contract terms and conditions between charterers and owners.
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Early movers, who understand how to use the EU ETS as a strategic tool, do not wait for the first surrendering period of allowances but take advantage by engaging proactively. They understand that action must be taken today, as certain expenses are already incurred, and affecting contracts and negotiations.
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A common misconception among charterers and shipowners is that they don't need to worry about the EU Emissions Trading System (ETS) until September 2025. However, if you're signing charter parties in 2024, this mindset could be akin to signing a blank cheque.
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