As the European Union (EU) gears up for the launch of the Emissions Trading System (ETS) on January 1 next year, shippers can breathe a sigh of relief knowing that the immediate impact on their operations may be less severe than anticipated. According to Emily Stausbøll, an analyst at market intelligence platform Xeneta, the introduction of the EU ETS will initially manifest as a surcharge rather than a groundbreaking obstacle for the shipping industry.The EU ETS, a cornerstone of the European Green Deal, aims to drive down carbon emissions by placing a cap on the total amount of greenhouse gases that can be emitted by certain sectors. While the shipping industry is not a new entrant to environmental regulations, the EU ETS brings a unique approach by introducing a cap-and-trade system, allowing companies to buy and sell emission allowances.Xeneta, which closely monitors market trends and provides valuable insights for the shipping community, suggests that the immediate impact of the EU ETS on shippers will be felt primarily through a surcharge. This additional cost is tied to the purchase of emission allowances, providing companies with the f lexibility to meet their emission targets while continuing their operations. "Currently, there aren't enough rules pushing carriers to go green right away. The new systems and regulations aren't expensive enough to make that happen," said Stausbøll. "What's likely is that the EU ETS will be an added expense for carriers in 2024 when moving in and out of the EU. They'll probably pass on the cost to shippers, as they often do. For the foreseeable future, the EU ETS will be a surcharge and not even one of the biggest ones."According to Stausbøll, several carriers have already indicated what they estimate the EU ETS surcharge will be in the first quarter of next year. “Some of the figures we are seeing are more reasonable and easier to understand than others, but at present there is quite a big spread between carriers on this cost.”Industry experts believe that the phased implementation of the EU ETS and the gradual tightening of emission caps provide shippers with a window to adjust and adapt to the new regulatory landscape. This approach aims to strike a balance between environmental sustainability and the economic realities of the shipping sector.Stausbøll agreed, stating that the EU ETS could likely become pricier and more challenging in the future as the carbon price presumably rises. "In its first year, though, we don't anticipate a huge impact on the overall shipping industry.”The long-term effects of the EU ETS are still uncertain, but according to Xeneta's assessment, the shipping sector seems poised to handle the initial phase of implementation quite smoothly.
