Projected $20 Billion Liability for Shipping Industry in EU ETS.

Speculation regarding the cost of shipping from the European Union’s Emissions Trading Scheme (ETS) has been widespread, and now Hecla Emissions Management has released an analysis shedding some light on the matter. The consultancy, which was established by Wilhelmsen Ship Management and Affinity Shipping to assist the shipping industry in meeting its obligations, used the European Union’s monitoring, reporting, and verification system’s 2022 data set for their findings. Their calculations, based on an emission allowance value of 90 euros per metric ton of CO2, suggest that the shipping industry could face liabilities amounting to $20 billion in the first three years of the ETS’s implementation.

Taking into account the three-year introductory phase of the ETS, Hecla Emissions Management projected costs of €3.1 billion at 40 percent coverage in 2024, €5.7 billion at 70 percent coverage in 2025, and €8.4 billion at 100 percent coverage in 2025. This totals to 17.2 billion euros or 18.9 billion US dollars at current exchange rates. Hugo Wilson, director of Hecla Emissions Management, emphasized the significance of shipping companies preparing to join the ETS in light of these projected liabilities.

Addressing variations in annual CO2 emissions across different shipping sectors, Wilson pointed out that shipowners could take action as part of their normal trading behavior, despite precautionary measures against circumvention tactics being included in the ETS system. Hecla’s analysis also highlighted changes in emission levels between 2021 and 2022, attributing some of these variations to shifts in the market environment. For instance, container shipping experienced high demand in 2021 but a cooler market in 2022, resulting in an 8.95 percent emission reduction or a saving of around 2.3 million tonnes of CO2 equivalents.

While several shipping segments, such as tankers, general cargo ships, and reefer ships, demonstrated emission reductions, passenger ships recorded a 118 percent increase in CO2 equivalents in 2022. This rise might be partially attributed to a rebound in travel after pandemic-related slowdowns in previous years. Additionally, LNG carriers saw significant gains of 63 percent, reflecting increased demand in Europe for LNG shipments as a substitute for gas supplies previously obtained from Russian pipelines.

The European Union’s monitoring, reporting, and verification dataset for European CO2 emissions from shipping indicated a modest overall reduction in emissions in 2022. Hecla regards this dataset as a reliable measurement for the ETS, as it requires all vessels over 5,000 gross tons to collect and report CO2 emission data to and from EU and EEA ports. This dataset serves as the foundation for the inclusion of shipping in the EU ETS starting from January 1, 2024.

Source .