While the safety of their clients’ ships and crew is the paramount concern when assessing the impact of the Red Sea situation, the European Union Emission Trading System (ETS) solutions provider OceanScore has cautioned that ships having to divert around the Cape will also incur the knock-on effects of increased fuel consumption and extra costs related to their exposure to the EU ETS.
In a notice posted on its LinkedIn page today (11 January), OceanScore said that ‘diverting around the Cape adds 80% distance to Asia-Europe voyages, spiking bunker costs’, and ‘increased speeds add to this’.
Speaking to Bunkerspot this morning, OceanScore’s Co- Managing Director Albrecht Grell said the combination of the greater distances and the higher speeds will add to a ‘significant increase’ in charges related to the EU ETS (which was expanded to include maritime emissions at the start of this year).
OceanScore calculated that a 14,000 TEU box ship diverting around the Cape would see its EU ETS costs rise by around €100,000 (at today's allowance price of €74 at 40% phase-in) per voyage. This is without factoring in the speed increase of the journey, which would spike fuel usage further.
Furthermore, OceanScore warned that: ‘If this scenario were to have occurred in 2025, with charges increasing to 70%, the corresponding allowance costs would escalate by up to €175,000. In 2026 when the ETS regime is phased in at 100%, this would equal €250,000.’
Grell pointed out if ships are forced to continue diverting around the Cape there will be a spike in shipping’s overall annual emissions – and the authorities will need to take this into account when they consider the shipping industry’s efforts to meet its environmental targets and obligations.
OceanScore’s Managing Director Albrecht Grell talks more about the challenges of the EU ETS in the currently December/January issue of the Bunkerspot magazine. Click here to view the online version of the interview.
