November 29, 2023
The EU ETS is a cornerstone of the EU's policy to combat climate change and its key tool for reducing greenhouse gas emissions cost-effectively. It is the world's first major carbon market and remains the biggest one. It is important to know that the EU ETS is not a sustainable product offered by Turkon.
ETS operates in the European Economic Area (EEA) and European Free Trade Association (EFTA) countries. This means that the trading system governance stretches to 100% of emissions from voyages in and between EEA/EFTA ports and 50% of emissions from voyages sailing between a non-EEA/EFTA port and an EEA/EFTA port. Furthermore, in the fourth quarter of 2023, the EU will supply a list of ports that will not count as ports of call.
Under the European Climate Law, EU Member States will work collectively to become climate neutral by 2050. As a first milestone, the EU is aiming to reduce net emissions by at least 55% by 2030 compared to 1990. The revised EU ETS will contribute to delivering this target.
The rule makers have decided to gradually add shipping emissions to its carbon market from 2024 onwards;
• In 2025, pay for 40% of emissions released in 2024
• In 2026, pay for 70% of emissions released in 2025
• From 2027, pay for 100% of emissions released in 2026 and onwards
The EU ETS works on the ‘cap and trade’ principle. A cap is a limit set on the total amount of greenhouse gases that can be emitted by the installations and aircraft operators covered by the system. The cap is reduced annually in line with the EU’s climate target, ensuring that emissions decrease overtime. Since 2005, the EU ETS has helped bring down emissions from power and industry plants by 37%.
The cap is expressed in emission allowances, where one allowance gives the right to emit one tonne of CO2eq (carbon dioxide equivalent). For each year, companies must surrender enough allowances to fully account for their emissions, otherwise heavy fines are imposed.
Within the cap, companies primarily buy allowances on the EU carbon market, but they also receive some allowances for free. Companies can also trade allowances with each other as needed. If an installation or operator reduce their emissions, they can either keep the spare allowances to use in the future or sell them.
Turkon Line environmental policy is already based on the following core principles:
• Environmental Impact Minimization: During our operations, we strive to minimize our environmental impact by using natural resources efficiently and effectively. We emphasize the importance of the life cycle and encourage continuous improvements in waste management and natural resource consumption, working towards recycling and reuse of waste.
• Sustainable Transport Solutions: We adopt approaches that reduce the environmental impact of maritime transport and support eco-friendly solutions. By supporting the use of environmentally friendly technologies and innovative methods, we enhance our contribution to the environment. We diligently monitor, track, and measure our process performance.
• Pollution Prevention: To prevent pollution in the maritime industry and protect natural ecosystems, we adhere to international standards and regulations. Identifying environmental risks, impacts, and dimensions, we implement preventive measures and consistently improve our activities to reduce our environmental footprint below the prescribed legal limits.
Therefore Turkon Line always considers additional rules as a key step towards setting uniform standards that will help both the environment and people and goals to set up a best way that enables a calculation of costs for its customers that is transparent and easy to understand.
The ETS charge will be re-calculated quarterly and will be based on a formula that combines EU ETS relevant CO2 emissions with market prices for EU Allowances (EUA) as follows:
EU ETS-relevant CO2 emissions per TEU are based on the industry-aligned Clean Cargo methodology for CO2 calculation and consider the ETS regulatory framework condition. These are then multiplied by the market price for EUAs sourced from the ICEDEU3 Index using a three-month average. This results in the ETS surcharge amount per TEU which is updated quarterly. The impact of the new regulation will be visible from January 1, 2024, to retroactively pay for 40% of emissions in September 2025.
We will publish actual surcharge with minimum 30 days of advance notice prior effective date of implementation for following trade zones.
Regions
Eastern Mediterranean (incl. Black Sea) – North Europe
North Europe - Eastern Mediterranean (incl. Black Sea)
Eastern Mediterranean (incl. Black Sea) – South Europe
South Europe - Eastern Mediterranean (incl. Black Sea)
South Europe – USA
USA - South Europe
Eastern Mediterranean (incl. Black Sea) - USA
USA - Eastern Mediterranean (incl. Black Sea)
