Beginning January 1, 2024, new carbon taxes will impact all shipping customers involved in transporting goods to, from, and within the European Economic Area (EEA), which consists of EU member states, as well as Iceland, Liechtenstein, and Norway.
Ocean carriers have announced the implementation of the European Union’s Emissions Trading System (EU ETS) surcharge to cover the costs of the CO2 charge of shipping in the EU.
Carbon pricing within the EU ETS is calculated based on vessels rather than cargo. As a result, ship operators must report their emissions and allocate allowances for each ton of CO2 they generate.
These carbon taxes extend beyond the EU, meaning that half of the emissions will be subject to the new charges if a vessel travels between the EU and a non-EU country. Therefore, shipping companies must purchase carbon allowances for the following emissions:
• 50% of emissions from voyages departing from an EU port to/ from a non-EU port
• 100% of emissions from voyages between EU ports
• 100% of emissions from ships docked at an EU port
The EU ETS aims to create financial incentives for reducing CO2 emissions.
Shipping companies must purchase emission allowances equivalent to each metric ton of reported CO2 emissions. The new carbon pricing increase will be implemented over a three-phased period, gradually increasing the carbon price per ton of CO2 from 2024 to 2027:
John S. Connor will continue to monitor the situation, and report here when more specific information has been communicated.