OOCL announcement on EU Emission Trading System related Quantum

Nov 30, 2023

The society is paying more and more attention to climate change as well as the environmental impact from the global supply chain and shipping industry, thus resulting in more and increasingly stringent environmental regulations in the shipping industry. Starting from January 1, 2024, the scope of European Union Emission Trading System (“EU ETS”) will be extended to maritime transport. This message serves to provide the details and the impact of EU ETS that you should know.

About EU ETS

The European Union Emission Trading System (EU ETS) is a program launched by European Union (EU) in 2005 to reduce greenhouse gas (GHG) emissions. Through its ‘cap and trade’ principle, a limit is set on the total amount of greenhouse gases that can be emitted by the companies covered by the system. Initially targeting energy-intensive industries and aviation transportation, the coverage of EU ETS will be extended to maritime transport, effective from January 1, 2024.

Under this expansion, cargo ships traveling within and to/from the European Economic Area (EEA), which encompasses the 27 EU nations, Iceland, Liechtenstein, and Norway, will be subject to the regulations of the EU ETS as follows.

Coverage of EU ETS in maritime transport:

100% of the emissions at EU ports and 100% of the emissions on voyages between EU ports.
50% of the emissions on voyages between EU ports and non-EU ports.

In addition, some aspects of EU ETS law are yet to be finalized, such as the list of ports considered as transshipment ports that will be published by the end of 2023 and may be reviewed every 2 years.

Effects and Emission Quantum

Under the EU ETS program, shipping carriers will have to surrender EU Allowances (EUAs) equivalent to their emissions. During the initial phase-in period, a portion of reported emissions need to be converted into EUAs as follows:

In 2024: for 40% of the reported emissions

In 2025: for 70% of the reported emissions

From 2026 onwards: for 100% of the reported emissions

The price of EUAs is variable and carriers are required to obtain them through auctions or the second-hand market.

Even taking into account our ongoing programs to reduce emissions, it is still inevitable that the EU ETS will generate additional costs connected to us and the whole industry. As a responsible party in the supply chain, cargo owners or shippers should be prepared to share this cost. OOCL will be introducing the Emission Quantum, effective January 1, 2024, on various affected service routes, including Asia-Europe, Intra-Europe, Trans-Atlantic, Europe-Latin America and Europe-West Africa. The quantum will be subject to monthly reviews in response to the latest EUA price and additional costs incurred in relation to EU ETS.

Below is the tariff (Emission Quantum):

Trade	Trade Bound	Dry (in EUR) per TEU	Dry (in EUR) per FEU	Reefer (in EUR) per TEU	Reefer (in EUR) per FEU
Asia-Europe	North Europe to Far East	17	34	26	51
	Far East to North Europe	27	54	41	81
	Mediterranean to Far East	10	20	15	30
	Far East to Mediterranean	19	38	29	57
Intra-Europe	North Europe to North Europe	29	58	44	87
	South Europe to South Europe	10	20	15	30
	North Europe to/from South Europe	29	58	44	87
Trans-Atlantic	Canada to Europe	9	18	14	27
	US to Europe	15	30	23	45
	Europe to Canada	23	46	35	69
	Europe to US	46	92	69	138
Latin America & Africa	Europe to West Africa	21	42	32	63
	West Africa to Europe	21	42	32	63
	Europe to Mexico	30	60	45	90
	Mexico to Europe	30	60	45	90
	Europe to South America	11	22	17	33
	South America to Europe	11	22	17	33
Australia & New Zealand	North Europe to Australia & New Zealand	17	34	26	51
	Australia & New Zealand to North Europe	27	54	41	81
	Mediterranean to Australia & New Zealand	10	20	15	30
	Australia & New Zealand to Mediterranean	19	38	29