It has been “quite a year” for ship owners preparing for the EU Emission Trading System, according to Steve Laybourn, chartering manager at Ardmore Shipping. Describing the preparation as a “bit of a rollercoaster ride”, Laybourn urged laggards to move quickly and put in place proactive measures. “We’ve had to negotiate everything from our internal roles, responsibilities, workflows, and dealing with our technical managers. We’ve had to set up a trading account with our EU Administering Authority…”
Being accountable
Moderating the Carbon Panel as part of the Forum, Martin Crawford-Brunt, emissions lead at the Baltic Exchange, echoed Laybourn’s sentiments, cautioning against the inadvertent dilution of environmental accountability. “If you roll the carbon into freight, you lose sight of it. You also lose the opportunity to differentiate between the better owners and operators, those people investing more,” Crawford-Brunt said.
Looking at the legal perspective, Philip Roche, a partner at Norton Rose Fulbright LLP, highlighted the legal complexities surrounding EU ETS implementation and MOHA establishment. Laybourn noted that following the rule of law, ship owners must create one MOHA for each ship, “which is an absolute nonsense”. Ardmore has a joint venture technical manager who is responsible for each of its ships. “That’s a huge sigh of relief because I don’t need to worry about third-party technical managers and their obvious reluctance to take on the obligations.”
Roche also stressed the importance of setting up trading accounts instead of a MOHA. “Nobody is going to be surrendering anything until September 2025. Everybody’s got their chance to get their ducks in a row. What is important now is making sure that you are collecting EUAs, and you’ve got a trading account that you can put them in.”
Price Spike
Ioannis Papadimitriou, lead freight analyst at Vortexa, warned of potential price spikes and trade pattern shifts because of the ETS’ requirements. “If everybody waits and does not purchase any of the allowances until September then we might see a spike in prices. And this spike in prices will drive changes on trade patterns,” he said.
Papadimitriou also warned of the specter of multiple-tier markets where more efficient owners and more sophisticated ones – depending on the choice of propulsion – choose to operate only in European routes, and less sophisticated owners operate in the non-European ones.
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Source: BalticExchange
