News / 'Pooling' ships could save millions in EU ETS payments, says report

08/02/2024

As the EU ETS standards set in, classification society Lloyd’s Register (LR) has released a report illustrating some of the ways shipowners might try to play the system in the coming years.

The Loadstar has covered the incentives for ETS-dodging: shippers face higher costs for operating within European waters, as transhipment facilities in the Mediterranean face being undercut by non-EU competitors – Egypt’s Port Said and Morocco’s Tangier Med, for example, not being bound by the same rules.

But the new report shows that the differences between transhipment operations outside and inside the EU are stark. A statement from the Medcenter Container terminal at the Italian port of Gioia Tauro said: “Shipping companies that choose North African ports for transhipment services will achieve substantial savings… the economic difference between an operation via Gioia Tauro and Port Said or Tanger can amount to around €700m per year.”

Alberto Perez, LR global head of maritime commercial markets, said he expected some charterers to stop trading in Europe, “as a result of the extra cost and uncertainty”.

But LR also emphasised that the practice of ‘pooling’ would allow for a relatively small number of new fleet additions to have a disproportionately favourable impact, from a regulatory point of view, without requiring large numbers of non-compliant vessels to be replaced with their equivalent in low-emission ships.

A ten-strong fleet of 19,000 teu containerships running on very-low-suphur fuel oil would incur some €277m in cumulative FuelEU penalties between 2030 and 2034; but, pool them with just one methanol-fuelled vessel, and that ship would generate sufficient surplus to entirely mitigate the deficits of the ten, leading to a saving of €277m – which, LR noted, “far outweighs the likely cost of building the methanol-fuelled containership”.

It added: “The pooling option in FuelEU means that companies investing in a low-carbon-fuel-capable ship could not only reduce their own exposure, but would also be in a very strong bargaining position when offering to pool with other non-compliant vessels.”

The European Commission this week confirmed it would be targeting a 90% decrease in greenhouse gas emissions by 2040, compared with 1990 levels, as well as an intermediate target of 55% reduction by 2030.