Ocean Network Express to roll out EU ETS surcharge amid regulatory changes

Starting October 1, 2024, Singapore-based shipping company Ocean Network Express (ONE) will implement an Emissions Trading System (ETS) surcharge as part of its response to the European Union’s inclusion of the maritime industry in its emissions trading scheme.

According to a report by ONE, the implementation of the ETS surcharge—which has become compulsory in the maritime industry since January 2024— goes hand in hand with the EU’s move that intends to drive down greenhouse gas output in the shipping industry.

A global backbone of trade responsible for transporting billions of tons of merchandise across the world, the shipping industry has been a substantial polluter, with emissions having grown more than 80% since 1990.

This has reached its near-peak, with more recent data showing that, between 2012 and 2022, there was another jump in international shipping emissions, reaching a roughly 15% upward trend to a record high of almost 710 MtCO₂.

In an attempt to ward off the imminent environmental repercussions, recently, there have been considerable movements toward GHG emissions reduction in the maritime sector.

Last year, the International Maritime Organization (IMO) adopted a revised decarbonization strategy at the Marine Environment Protection Committee (MEPC 80) climate summit in London.

IMO’s strategy obligated shipping companies to reduce their CO2 emissions per transport work by at least 40% by 2030, compared to 2008. The strategy also pushed for the uptake of zero or near-zero GHG emission technologies, fuels and/or energy sources to represent at least 5%, striving for 10%, of the energy used by international shipping by 2030.

Simultaneously, the EU set a goal of reducing GHG emissions by at least 55% by 2030, compared to the 1990s level, and a net-zero goal by 2050. In 2021, the EU’s “Fit for 55” climate policy package extended the EU ETS to the shipping sector.

Under EU ETS, companies must monitor, report and verify their GHG emissions on an annual basis. This data will be used to determine the European Union Allowances (EUA) that need to be surrendered within a compliance period.

In order to comply with this set of regulations, ONE revealed that the company would closely follow further developments. Specifically, ONE is going to be refreshing the EU ETS tariff every quarter, by referring to the December Future Price of the EUA price tracker sourced by ICE.

Furthermore, to prepare for EU ETS compliance, ONE has reportedly improved its internal system to reflect CO2 emissions data ‘more accurately’. In early 2023, ONE rolled out a brand-new tool to calculate carbon emissions more accurately.

Dubbed the ONE Eco Calculator, the tool is said to provide information regarding the total distance and total CO2 emissions from the place of receipt to the place of delivery, including door locations, allowing the calculator’s users to choose environmentally-friendly options wherever they can.

In addition, ONE also opened a trading account on the Union Registry to hold and transfer EUA.

As a result, ONE completed its first EU carbon allowance transaction with the French bank, BNP Paribas, securing this inaugural purchase in February. Following the acquisition, ONE has highlighted that the EUA would be passed on to the vessel owners as per the agreements and EU ETS guidelines, allowing the owners to meet their surrender obligations to the EU by September 30, 2025.