Dear Valued Customer,
The rising concern over global warming and climate change has prompted a collective effort to address environmental challenges. Among the significant contributors to greenhouse gas (GHG) emissions is the transport and logistics sector, necessitating the implementation of effective measures to reduce emissions.
Initiated in 2005, the EU Emission Trading System (ETS) is a market-driven mechanism designed to combat climate change by encouraging entities, including shippers and customers, to reduce GHG emissions. Aligned with the EU's goal to achieve carbon neutrality by 2050 and a 50% reduction in greenhouse gas emissions by 2030, the ETS operates on a 'cap-and-trade' principle, progressively limiting the total allowable emissions.
Beginning January 1, 2024, shipping will be included in the EU ETS.
Already encompassing over 11,000 installations such as power stations, steel producers, and chemical plants, as well as airlines within the European Economic Area (EEA), the EU ETS was expanded in December 2022 to include the shipping industry. This extension, formally adopted in May 2023, will result in new carbon taxes affecting all shipping customers involved in transporting goods to, from, and within the EEA.
Impact on Maritime Shipping:
Carbon pricing within the EU ETS is calculated based on vessels rather than cargo. Ship operators are required to report emissions and allocate allowances for each ton of CO2 generated. The carbon taxes apply beyond the EU, affecting emissions from voyages departing from EU ports to non-EU ports (50%), voyages between EU ports (100%), and ships docked at EU ports (100%).
Carbon Pricing Increase from 2024:
The carbon pricing increase will be phased in over three years, with companies submitting allowances for:
European Union Allowances (EUA) must be purchased and submitted annually.
Potential Cost Impact:
Ocean carriers are implementing an ETS surcharge to cover the CO2 charge of shipping in the EU. While the exact amount remains uncertain, calculations per TEU will be based on the Clean Cargo methodology for CO2 multiplied by the market price for EUAs from the ICEDEU3 Index, updated quarterly. The ETS Surcharge will become applicable for all cargo moving from, to or via Europe effective January 1st, 2024.
Thank you for being our Valued Customer. If you have any questions, please do not hesitate to contact your C.H. Robinson commercial representative for further information.
Sincerely,
C.H. Robinson