As the one of logistic stakeholder, it’s imperative to understand the forthcoming European Union (EU) carbon emission policies set to take effect in 2025 and their potential impact on the logistics and shipping industry. These regulations are part of the EU’s broader “Fit for 55” initiative, aiming to reduce greenhouse gas emissions by 55% by 2030 compared to 1990 levels. Here is the detail explanation:
- European Union Emissions Trading System (EU ETS) Extension to Maritime:
o The EU ETS, a cornerstone of the EU’s climate policy, is being expanded to include the maritime sector. Shipping companies will be required to monitor and report their emissions, purchasing allowances corresponding to their CO₂ output. In 2025, companies must surrender allowances for 70% of their emissions, increasing to 100% by 2027. - FuelEU Maritime Regulation:
o Effective January 1, 2025, this regulation mandates a gradual reduction in the greenhouse gas (GHG) intensity of energy used by ships. The required reduction starts at 2% in 2025, escalating to 80% by 2050. This policy encourages the adoption of sustainable fuels and energy-efficient technologies within the maritime industry.
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Phone : (62-21) 8591 8669 (hunting), Fax. : (62-21) 8591 8664, E-mail : info@gateway-id.com - Carbon Border Adjustment Mechanism (CBAM):
o CBAM imposes a carbon price on imports of certain goods into the EU, aligning with the carbon costs faced by EU producers under the EU ETS. Currently in a transitional phase, CBAM will become fully operational by 2026, affecting industries such as cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen.
Potential Additional Surcharges from Shipping Lines and Their Impact on Shippers and Forwarders
With the EU’s carbon emission policies set for 2025, shipping lines will face increased operational costs, particularly from compliance with the EU Emissions Trading System (ETS) and the FuelEU Maritime Regulation. These costs are expected to be passed down the supply chain through additional surcharges, impacting shippers and forwarders significantly.
Types of Surcharges Expected - Carbon Emission Surcharges: Shipping lines are likely to introduce or increase fees tied to their carbon emissions to offset the cost of purchasing emission allowances under the EU ETS. This could be structured as a per-container or per-ton surcharge.
- Sustainable Fuel Surcharges: Transitioning to low-carbon or zero-emission fuels like biofuels or LNG (liquefied natural gas) is expensive. Shipping lines may introduce fuel adjustment surcharges to cover these additional costs.
- Administrative Compliance Fees: Additional costs related to monitoring, reporting, and verifying emissions data may also be passed on to customers as a separate surcharge.
Projected Financial Impact on Shippers
Increased Freight Rates: Shippers can expect a noticeable rise in shipping costs, potentially increasing by 5–20% per shipment, depending on route and cargo type
Other Routes
While the EU regulations primarily target EU-related routes, indirect surcharges may emerge for global routes as shipping lines:
- Attempt to standardize cost recovery models.
- Spread compliance costs across their global network to maintain competitive rates on EU-bound shipments.
For example:- A carrier operating primarily in Europe might adjust pricing on non-EU routes to offset EU compliance costs.
- Fuel surcharges may apply globally if a shipping line transitions its entire fleet to sustainable fuels, irrespective of the route.
Conclusion
Surcharges due to EU carbon emission policies are directly applicable to shipments involving EU ports. However, indirect impacts could extend to other routes, depending on the carrier’s cost-recovery strategies and global sustainability initiatives.
Information
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https://www.maersk.com/insights/sustainability/2024/10/10/what-you-need-to-know-for-2025
https://www.reuters.com/sustainability/decarbonizing-industries/
https://www.pwc.com/gx/en/services/tax/esg-tax/cbam-supply-chain-imperatives.htm Lagouvardou, S., & Psaraftis, H. N. (2022). Implications of the EU Emissions Trading System (ETS) on European container routes: A carbon leakage case study. Maritime Transport Research, 3, 100059. Google search: CNY Public Holiday
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