Shipping companies set to incur $3.6 billion carbon emissions bill in Europe as climate efforts intensify
Ships entering European ports will soon have to pay more, with a projected $3.6 billion total cost for carbon emissions the next year.
Ships entering European ports will soon have to pay more, with a projected $3.6 billion total cost for carbon emissions the next year. This is the beginning of a charge that will increase as Europe redoubles its efforts to tackle climate change.
The projection comes from Drewry Shipping Consultants Ltd., reflecting the total cost of complying with the European Union’s Emissions Trading System (ETS), scheduled to take effect on January 1, 2024. This regulation mandates that vessels entering and departing EU ports must pay for their carbon pollution, impacting a range of shipments from container loads of finished goods to liquefied natural gas crucial for winter heating.
While the $3.6 billion appears substantial, it represents a fraction of the revenues generated by international shipping and is not anticipated to significantly impact the prices consumers pay for goods. Last year, the shipping industry giant A.P. Moller-Maersk A/S alone recorded a profit just shy of $30 billion.
In 2024, DNV, a marine classification society, estimates that a container ship travelling between Europe and Asia could face charges of approximately €810,000 ($887,000) under the ETS, assuming a carbon price of €90 a ton.
“However, in the context of the ship's annual fuel bill, this amounts to only about 10%, highlighting that fluctuations in oil prices alone could potentially outweigh the entire cost of the ETS,” an industry expert commented.