German firm OceanScore and energy solution provider RWE Supply & Trading have joined forces on an integrated solution that enables ship operators both to manage emissions liabilities and trade carbon allowances under the impending EU ETS regime.
As explained, the solution is a web-based ETS Manager to manage and monitor the entire process from automatically ingesting vessel operational data, assessing the need for EU Allowances (EUAs), allocating them to owners or stakeholders, requesting and accounting for them, and tracking open positions. It incorporates the advanced trading tool EUA Trader, powered by RWE Supply & Trading, to buy and sell EUAs.
“The industry faces a major challenge to navigate the complexity of the new regulation and mitigate financial risk due to the requirement to purchase carbon credits to cover the cost of emissions, which will reach €8 billion or more annually,” OceanScore’s co-Managing Director Albrecht Grell said.
“The interplay between owners, managers and charterers creates significant complexities unique to shipping and poses potentially significant risks, especially for ship managers, if not managed properly. Excel alone will not be sufficient to maintain transparency and control of these processes.”
Grell said the comprehensive solution, with a high level of automation to reduce administrative workload and possible issues with wrong data entries, is geared to “simplifying complexity” for shipping companies.
Shipping companies, as the designated Document of Compliance holder (DoC holder) under the EU ETS regime, will be required to surrender to the authorities EUAs based on their annual emissions, starting at 40% of emissions in 2024 and rising to 70% and 100% of emissions in 2025 and 2026, respectively, under the three-year phase-in of the scheme.
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Shipping’s EU ETS bill could reach over €8 billion in 2026, Hecla warns Business Developments & Projects This will necessitate having administrative systems in place to track emissions and determine the volume of EUAs required, as well as to assign the costs of these to the owner or charterer based on the ‘polluter pays’ principle to avoid unnecessary financial exposure for the DoC holder, typically a ship manager.
OceanScore’s co-managing Director Ralf Garrn explained the regulation poses issues such as how to accurately monitor emissions, how to acquire and trade EUAs, which trading platform to use, how to achieve the best price, how many EUAs should be purchased and who should pay for carbon credits.
“With the clock ticking to implementation of the EU ETS, shipping companies need to understand the practical implications and initiate efficient systems to address these issues and ensure compliance. A solid monitoring solution, properly covering the many different options to deal with the ETS regime, is a necessity given the complexities of shipping and the ETS regulation,” he said.
Garrn further explained ETS Manager is undergirded by a network of third-party collaborations to support a smooth end-to-end process for emissions management.