- High gas prices curb low-carbon switch
- Ship operators remain unprepared
- Regulators yet to confirm final rules
Few shipping companies have started to prepare for the EU’s proposed inclusion of maritime transportation in the Emissions Trading System, whose initial decarbonization effects are expected to be minimal due to high gas prices, reports Platts.
Trading accounts for carbon credits
Once the new regulation comes into force, industry estimates suggest over 2,000 vessel operators would need to acquire emissions allowances — also known as EUAs — to stay compliant when trading at EU ports.
But Mattia Ferracchiato, head of carbon markets at shipbroker BRS, said he observed that just three shipping firms had set up trading accounts for the carbon credits.
“Some have a person or department dedicated to carbon regulations and ETS but not trading yet…The reality is that most of the companies are not aware about the consequence of the ETS,” Ferracchiato told S&P Global Commodity Insights.
Shipping industry in sand
James Ash, head of environmental markets at SSY Futures, the derivatives division of shipbroker Simpson Spence Young, said many in the shipping world are “a little bit head in the sand” even as the regulation could come into force in less than five months’ time.
The European Commission, the European Parliament and the Council of the EU have yet to agree on the types and amounts of shipping emissions to be included in the ETS, the world’s largest carbon market by liquidity.
In terms of timeline, the EC initially proposed the inclusion starting from 2023 but lawmakers and EU member states prefer 2024.
No firm deadline
Market players expect the decision-making bodies to iron out the final rules in September or October, but an EU source said there is no firm deadline to conclude the negotiation.
“We are quite late in the day now,” said Ash, adding that the administrative process to set up an account to trade over-the-counter EUAs could take one to three months.
“As much as we want to get these people up and running, they can’t at the moment…It has to do a large part with the regulation,” he added.
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Source: Platts
