UK eyes expanding its ETS to deepsea shipping – closing EU loophole
A loophole allowing ocean carriers to dodge ETS charges via a port call in the ...
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Hapag-Lloyd has notified customers that existing EU ETS surcharges are expected to “roughly double” as the sustainability initiative’s scope widens on 1 January.
But, it added, the higher costs could lead to ‘creative routes’.
The German carrier explained that surcharges would be increased to cover the EU ETS increase, as well as costs arising from fuel bunkering to meet FuelEU Maritime regulations.
Due to the gradual phase-in of the EU ETS, carriers currently only pay for 40% of their vessel emissions in the ETS scope, but on 1 January this goes up to 70%.
Companies must purchase ‘carbon credits’ (EUAs) in accordance with their emissions on journeys starting or ending at EU ports, with the price of EUAs dependent on the market rate.
All emissions on voyages between EU ports are monitored, versus 50% for journeys starting or ending in the EU; and Hapag-Lloyd recently announced a change to its China-Germany Express service (CGX) from 3 January, with its first port of call in Europe as non-EU Southampton, rather than Antwerp.
Thus, Hapag-Lloyd will pay for 50% of emissions for the Southampton to Rotterdam leg, rather than for the emissions from its previous stop at the port of Tema in Ghana.
“Obviously a much shorter distance, with much less emissions and, thus, much less EU ETS cost,” explained Friederike Hesse, co-founder and MD of maritime carbon solutions software platform zero44.
She told The Loadstar: “Adding Southampton to the voyage is making the transport work cheaper and thus more competitive from a Hapag-Lloyd perspective.”
But she added: “If the sole purpose of the new routing is avoiding EU ETS costs, then we might see a political reaction in the future” – a suggestion that the EU may review its listed transhipment ports.
The EU currently has two, East Port Said in Egypt and Tangier Med in Morocco, both within 300 nautical miles of a port under the jurisdiction of a member state, but won’t be considered as a “port call”. This reduces the risk of evasive shipowners seeking to minimise exposure to EU ETS by shortening emissions within the scope of ETS.
However, Albrecht Grell, MD of Hamburg-based maritime technology firm Oceanscore, told The Loadstar: “If more and more carriers decide to take this route, there will be delays, congestion and additional costs. We thus assume that, in the long run, it won’t be a widely applied tactic.
“It’s also too narrow-minded to consider or compare only ETS costs – Hapag will also have to take into consideration the cost of the detour to Southampton, the cost of the port call and, perhaps, other logistics inefficiencies,” he added.
A spokesperson for Hapag-Lloyd told The Loadstar: “In general, the savings from a lower EU ETS share will be passed on to our customers. However, we use a portfolio approach, applying an average for the concerned transport legs and, thus, help that we do not discriminate depending on the allocation of the customer box to the respective services.”
Hapag-Lloyd will recover ETS costs through “one transparent surcharge” in conjunction with FuelEU Maritime, also set to be implemented on 1 January.
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