OceanScore: Asian shipowners face hefty EU-bound emissions liabilities

(Posted on 22/02/24)

Asian shipowners with vessels sailing to and from Europe are likely to face estimated emissions liabilities of over €1 billion once the EU Emissions Trading System (EU ETS) is fully implemented, with companies registered in China and Singapore bearing the highest burden, according to OceanScore.

The Hamburg-based maritime technology firm has calculated that Asia-based Document of Compliance (DoC) holders will ultimately have to surrender a total of between 15-16 million EU Allowances (EUAs), or carbon credits, for voyages to and from the EU that are liable for 50% of emissions, while port calls and transits within the EU are liable for 100% of their emissions.

OceanScore estimates EU ETS costs for Asian owners of around €500 million this year when they will be liable for 40% of their emissions, rising to 70% in 2025 and 100% in 2026 under the three-year phase-in of the regulation.

The EU ETS, implemented from 1 January 2024, will affect around 4000 Asian-flagged vessels, or about one-third of the total 12,500 cargo and passenger ships above 5000gt that are currently subject to the EU ETS, according to the company.

These are owned or operated by 400 DoC holders, including major players like China’s COSCO, Hong Kong-based Anglo Eastern Ship Management and South Korean HMM, with around half of affected vessels operated by non-EU DoC holders.

EU ETS costs a moving target

The total €1 billion cost estimate for Asian shipping, based on the expected volume of EUAs set to be surrendered by regional DoC holders from 2026, is contingent on the volatile carbon price that is currently at a relatively low level of around €55 per tonne of CO2 after fluctuating between €80-100 last year.

The carbon price is dictated by supply and demand for EUAs, with the volume of allowances available for trading set to be gradually reduced over time under the cap-and-trade system to incentivise investments in measures to cut ship emissions.

OceanScore’s co-Managing Director Albrecht Grell says a total of nearly 80 million EUAs will have to be surrendered by the shipping industry once the EU ETS is fully phased in, of which 40% will come from non-EU companies, also including the UK, Norway and Turkey.

OceanScore forecasts that, at full phase-in, around 5.5 million EUAs will have to be surrendered by Chinese and Hong Kong-based entities and 5.4 million by Singaporean players, with the remainder coming from Japan (1.6 million), South Korea (1.2 million) and India (1.1 million). When other Asian countries such as Thailand and Malaysia are included, the total number of EUAs required rises to 20 million.

In a breakdown of costs exposure for individual companies, OceanScore has calculated that a company with 15 vessels would be required to surrender just over 300,000 EUAs, which would equate to a cost of €16.5 million based on the current carbon price.

Voyages into and out of Europe account for around 59% of emissions covered by the EU ETS, versus 41% for voyages and port calls within Europe, but will still have a lower cost burden than domestic European traffic due to the 50% liability factor.

Long-haul voyages into the EU can be broken up by stopping at transshipment ports to reduce emissions exposure, but Grell says “we don’t see many people seriously discussing this” due to the negative impact on fuel costs, waiting times, additional sailing distance and other inefficiencies.

Asian players represent around 25% of the overall 1700 DoC holders that now must relate to the regulation, which is in particular focusing the minds of European owners with an EU-centric deployment pattern for their vessels.

“Consequently, we see that European owners generally have started to prepare earlier for compliance with the EU ETS as it is closer to home and is therefore perceived as having a more tangible financial impact on their operations,” Grell says.

“It is also typically easier for companies domiciled in the EU to set up Union Registry accounts required for handling EUAs, as well as gain access to trading platforms, which is more difficult for those based in non-EU countries given sometimes quite complex Know Your Customer (KYC) processes.”

Latest News

Posidonia 2026 takes centre stage amid global freedom of navigation challenges

From insurance and risk management to energy transition, digitalisation and maritime security, the Posidonia... Read more

First maritime compliance & prevention-focused organisation, PaS, joins DBCE

Prevention at Sea (PaS), a leading maritime compliance, auditing, and digital solutions provider, has... Read more

NorthStandard reports strong results and strategic momentum

NorthStandard has reported strong financial results, continued strategic progress and enhanced support... Read more

Latest guidance for vessel transit through Strait of Hormuz

Hundreds of vessels remain unable to transit the Strait of Hormuz and, in the event of a return to more... Read more

The Bahamas regains QUALSHIP 21 eligibility

The Bahamas has regained eligibility for the United States Coast Guard’s QUALSHIP 21 programme... Read more

First dedicated STS standard for dry bulk released by INTERCARGO

Ship to ship (STS) transfers are an established part of dry bulk operations, and they are growing. As... Read more

Columbia reinforces commitment to maritime talent

Columbia Group has strengthened its commitment to developing the next generation of maritime professionals... Read more

Jamaica marks 50 years at IMO with call for island states to shape future

The Maritime Authority of Jamaica has marked Jamaica’s 50th anniversary as a member of the International... Read more

Costamare Bulkers logs first profit after Cargill deal removes most legacy trading

Costamare Bulkers Holdings Limited has reported unaudited financial results for the first quarter ended... Read more

NORDEN strengthens fleet with the addition of four Handysize vessels

NORDEN have announced that they have expanded their fleet with the purchase of four dry cargo Handysize... Read more