Norway’s car carrier operator Wallenius Wilhelmsen gave an update on the EU emission trading system.
“It has been a year since shipping was included in the European Union Emission Trading System (EU ETS), and now the first emission scope increase has entered force.
The first increase in scope entered force on 1 January 2025, in line with the phase-in of shipping into the EU’s well-established emission trading system.
The increase in scope is from 40% of emissions in 2024 to 70% in 2025.
What does this mean?
As last year, Wallenius Wilhelmsen has to keep purchasing EU allowances (EUAs) corresponding to its emissions.
With the increase in scope from 40 to 70%, Wallenius Wilhelmsen’s EU ETS surcharge will also increase.
Wallenius Wilhelmsen is dedicated to reducing our GHG emissions, and thus our need for EUAs, through several decarbonization efforts.
Our customers who adopt the new multi-fuel BAF, BAF2.0, will get a 10% discount on the EU ETS surcharge as of 1 January 2025, due to the use of biofuel blends.
The EU ETS surcharge will, similar to our bunker surcharge, be reviewed quarterly and change in line with the price evolution of EUAs over the previous three months.
In terms of geographical reach, the scope of the ETS for shipping includes 100% of emissions on voyages and during port calls within the EU/EEA (European Economic Area), and 50% of emissions on voyages into or out of the EU/EEA.
Although the UK is now not part of EU ETS, cargoes in and out of UK are always co-loaded with EU cargoes on all voyages in and out of EU, therefore we apply the EU ETS Surcharge to all cargoes to/from UK and EU.
How does EU ETS work?
The EU ETS was first introduced in 2005, with the funds generated going to support member states’ investments in renewable energy, energy efficiency measures and technologies that can help reduce emissions.
The ETS works on the cap-and-trade principle. A cap is set on the total amount of greenhouse gases that can be emitted by the various industries covered by the system.
This cap is reduced annually in line with the EU’s climate targets, a 55% reduction in GHG emissions by 2030 relative to 1990, and net-zero by 2050.
The cap is expressed in emission allowances (EUAs), where one allowance gives the right to emit one tonne of CO2eq (carbon dioxide equivalent).
Each year companies must provide enough allowances to fully account for their emissions, or risk receiving heavy fines.
These allowances can be bought on the EU carbon market, or companies can trade allowances with each other if needed.”
