EU ETS Surcharges: Navigating Challenges In Accuracy And Transparency

• As shipping lines grapple with the European Union Emissions Trading System (EU ETS) surcharges, concerns arise regarding the accuracy and transparency of these additional costs.
• Introduced on January 1, the EU ETS mandates vessel owners to purchase EU allowances (EUAs) corresponding to their ships’ carbon emissions when calling at EU ports.
• While surcharge estimates currently appear manageable, experts caution that as the EU ETS phases in by 2026, potential surcharge spikes to €150 could significantly impact costs.
• The transparency of these surcharges comes under scrutiny, with industry voices advocating for clearer breakdowns and agreements between carriers and shippers.

The Standard Model and Potential Surcharge Impact

Oceanscore’s Albrecht Grell outlines a standard calculation for surcharges, emphasizing carriers’ use of generic assumptions. At the 40% phase-in stage, surcharges appear less significant, but concerns arise about their impact as the EU ETS becomes fully phased in by 2026. Grell suggests establishing solid agreements and understanding with carriers as EUA prices rise, potentially reaching €150.

Challenges in Surcharge Accuracy and Transparency

Grell acknowledges that standard approaches to surcharge calculations exist but advocates for more detailed methods involving AIS data and specific contributing factors. Director of Global Shippers Forum, James Hookham, expresses the need for transparency in surcharge calculations and suggests that carriers breaking up their journey could result in significant savings, making surcharges cheaper for carriers and subsequently for shippers.

Shippers Call for Transparency Amid Cape Diversions

Shippers are calling for more transparency in surcharges, especially as carriers consider diversions before entering EU ports. Hookham suggests that breaking up the journey and docking in the UK before the EU could result in shorter journeys and lower emissions to account for under the EU ETS. Shippers demand carriers to reveal their workings in surcharge calculations rather than presenting lumped bills, enhancing transparency.

Potential Inflationary Effects and End Consumer Impact

Experts warn of potential inflationary effects on end consumers due to higher shipping costs, drawing parallels with the impact seen during the Covid-19 pandemic. While surcharges might be a way for carriers to manage costs, the market is expected to regulate profits, ultimately affecting end consumers.

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Source: The Loadstar

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