EU Emission Trading System (EU ETS)

Everything you need to know!

Upcoming CO2 emission regulation impacts shipping industry

Pay for every ton of emitted CO2 and with a maximum emission per sector that decreases every year. That is what the EU Emission Trading System (EU ETS) stands for. With this system, the European Union wants to stimulate sectors to reduce CO2 emissions. As off 1st January 2023, these regulations will most likely also apply to the European shipping industry. A decision with potentially major consequences for both Wagenborg and your supply chain.

What is EU ETS?

EU ETS is a system that works with a limit of total emissions within a sector, which will gradually be reduced over the years. Within this limit, any company can buy and sell allowances as needed. You may emit 1 ton of CO2 for every emission allowance you own. If you have too few or too many allowances in relation to the CO2 emission cap, you can buy or sell additional allowances. Companies that emit a lot of CO2 therefore pay more than companies that emit less. This way, companies are stimulated and rewarded to invest in reducing CO2 emissions. A system that matches with the sustainability ambitions of Wagenborg.

How does EU ETS effect Wagenborg?

Vessel that take part in the EU ETS system, are monitoring, reporting and verifying the CO2 emissions per ship. Obviously, Wagenborg is compliant with this MRV-regulation by using high-end technologies, such as live data connections and state-of-the-art ERP software. With the new CO2 regulation, the costs for seaborne transport will increase. This also applies to the vessels of Wagenborg and affiliated captain owners. 

What are the exact consequences for seaborne freights?

That is not yet entirely clear, because the regulations are still under development.

  • It is still unknown what kind of voyages will be covered by the regulation: only voyages between European ports, all miles on European waters or a total voyage, if this crosses European waters.
  • A threshold may be introduced. For example, all ships under 5,000 GT may be excluded from the regulation.

Although the exact regulation is not clear yet, it is a fact that the costs for seaborne freight will increase as a result of shipping in the EU system.

Discuss the implications for your business?

Discuss the implications for your business?

The exact details are expected to be announced mid-2021. Of course, the Wagenborg EU ETS team closely follows developments. If there are any questions about this subject in the meantime, or if you want to get prepared in time, please get in touch with our EU ETS team.

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