Editorial / 03 Sep 2023

Setting sail on a greener voyage

With more than 50,000 merchant ships carrying over 80% of international trade, it is no surprise that shipping is responsible for a notable amount of carbon emissions.

According to a Statistica report published in August this year, carbon dioxide emissions from the world's merchant fleet have risen more than 20% since 2012. And despite a notable decline in emissions in early 2020 after the outbreak of COVID-19, emissions from the maritime fleet rebounded in the second half of the year.

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While the sector is doing its part to clean up its operations and develop a cleaner and greener future, regional bodies are stepping up their efforts to ensure shipping decarbonises and reduces its greenhouse gas (GHG) emissions.

Fit for 55
The European Union (EU) is the latest major legislative body to take steps to ensure ships docking at its ports reduce their emissions. To achieve its 2030 goals of lowering its carbon output by at least 55%, the bloc is revising its climate, energy and transport legislation, known as the ‘Fit for 55’ package, to include the maritime sector in its Emissions Trading System (ETS).

In place since 2005, the EU ETS is a market-based mechanism designed to reduce GHG across a number of sectors, including power and industrial, by placing a cap on the total amount of emissions that these sectors can produce. It also offers incentives to reduce emissions by issuing allowances that can be traded on a carbon market – those with a lower pollutant output than their allowance can sell their surplus to those emitting more.

As part of that decarbonisation drive, the system encourages shipping companies to adopt renewable forms of fuel and low-carbon technologies to drastically reduce their share of the GHG output.

From 1 January 2024, they will now be required to purchase allowances for all vessels of 5,000 GT and above. Initially, the allowance will cover 20% of total emissions for any ship calling at an EU port, to be surrendered by 30 September each year, and the percentage will increase incrementally as follows:

  • 40% of emissions in 2025, for 2024-verified emissions;
  • 70% of emissions in 2026, for 2025-verified emissions; and
  • 100% of emissions in 2027 and thereafter, for its emissions verified for 2025 and each year thereafter.

The EU ETS will apply to ships calling at EU ports, regardless of the flag that they fly, or where the owner of that ship is incorporated.

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In parallel with the EU’s efforts, the United Kingdom has announced that the maritime sector will be included in its own newly launched UK ETS from 2026. Initiated in 2021 and developed in a similar manner to its EU counterpart, the UK ETS will limit the total amount of GHG emissions from energy-intensive industries to encourage the adoption of cleaner and renewable energy and technologies.

Navigating legislation
As an industry-leading and renowned shipping agent, GAC plays a crucial role in ensuring that our customers are fully aware of the rules and regulations surrounding any port call, particularly tighter legislation surrounding emissions in a region that is taking bold steps to develop a greener future.

“The EU decision to include shipping in its ETS is a bold but important step in the right direction,” says Thomas Okbo, Group Vice President – Europe and Africa.

“Our offices throughout Europe are ensuring they are fully up to speed with the upcoming regulations and how it will affect our customers going forward. Not only are we committed to taking steps to reduce our own emissions in Europe, we are also working closely with our customers on their own decarbonisation journeys.”

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Customers looking to improve their emissions performance can tap on GAC Bunker Fuels’ network of alternative fuel suppliers to access fuels with smaller environmental impact such as LNG, methanol, ammonia and biofuel.

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