Singapore-based shipping company Ocean Network Express (ONE) has finalized its inaugural European Union Allowances (EUA) transaction with French bank BNP Paribas.
The EU Emission Trading System (EU ETS) — a ‘cap and trade’ system to reduce emissions via a carbon market — became compulsory for the maritime transport industry in January 2024. It applies to cargo and passenger ships above 5,000 GT from 2024 and offshore ships above 5,000 GT from 2027.
Shipping companies are mandated to monitor, report, and verify their greenhouse gas (GHG) emissions annually and this data will be utilized to determine the EUA that they need to surrender within a compliance period.
Non-compliance with these regulations will result in penalties and denial of entry to EU/EEA member states.
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EU ETS will cost the shipping industry billions, says ITIC Rules & Regulation In preparation for immediate EU ETS compliance, ONE has enhanced its internal systems to accurately reflect CO2 emissions data. The company has also initiated a trading account on the Union Registry to hold and transfer EUA according to the procedures.
Through this proactive approach, ONE was able to secure its inaugural purchase of EUA from BNP Paribas on February 8, 2024. The acquired EUA will be subsequently transferred to respective vessel owners in compliance with the agreements as well as the EU ETS regulations, which will ultimately enable the vessel owners to meet their surrender obligations to the EU by September 30, 2025.
“The EU ETS is a cornerstone of EU’s policy to combat climate change and its key tool for reducing greenhouse gas emissions. This EUA deal with ONE is important for Asian carriers, demonstrating proactive readiness for EU ETS compliance,” BNP Paribas Singapore said.
“ONE remains committed to ongoing preparations for EU ETS compliance, aligning with the compliance process for surrendering EUA,” according to the company.
ONE, which was incepted in 2017 following the liner service integrations of Kawasaki Kisen Kaisha (K Line), Mitsui O.S.K. Lines (MOL) and Nippon Yusen Kaisha (NYK), recently ordered twelve 13,000 TEU methanol dual-fuel containerships in China.
The order is part of the ONE Green Strategy which has an ambitious target to achieve net-zero GHG emissions, encompassing Scope 2 and 3, by 2050.
To achieve the target, the transition from conventional fuel to alternative fuels is defined as ONE’s key pillar of green initiatives, and it is consistent with operational efficiency, green investment, and alternative fuels.