EU Emissions Trading System (ETS)

The EU Emissions Trading System (ETS) was implemented starting in 2024. Shipping companies are required to purchase Emission Allowances (EUA) to offset their CO2 emissions. The phase-in schedule began in 2024 with 40% coverage and will increase to 70% coverage as of January 1, 2025, ultimately reaching 100% coverage by January 1, 2026.

To address the additional costs associated with purchasing the necessary EUA certificates, an ETS surcharge was introduced effective January 1, 2024. The surcharge parameters include the number of certificates needed to cover the relevant CO2 emissions and the applicable price of the EUA certificates. The average EUA price from the 26th of one month to the 25th of the following month serves as the basis for the surcharge applicable in the upcoming month. For example, the surcharge for January 2025 will be communicated on 27.12.2024.

The 70% increase in the ETS surcharge, despite the required EUA coverage rising by 75% (from 40% to 70%), is due to the partial use of biofuel to reduce energy intensity in accordance with maritime fuel legislation effective from January 2025. Thanks to the lower energy intensity, the 75% coverage is achieved with a slightly reduced number of certificates.

The current ETS surcharge per route can be found here.

External resources

ETS: https://www.epa.ie/our-services/licensing/climate-change/eu-emissions-trading-systems-/

EUA Notation: https://sandbag.be/carbon-price-viewer/

TT-Line’s Green Ships Policy

TT-Line supports the EU’s ambition with sustainable solutions in its operations. TT-Line introduced the first Green Ships already in 1996 and is running with the newest Generation of Nils Holgersson (May 2022) and Peter Pan (February 2023) one of the world`s most modern and environmentally friendly RoPax vessels. TT-Line’s Green Policy includes several technology features and innovations that have significant positive impact on fuel consumption and emissions.

Bunker Adjustment Factor (BAF) as from January 1, 2025

The long-established BAF surcharge fluctuates with the development of fuel (bunker) costs, safeguarding that cargo is fair participating on both decreasing or escalating fuel costs. This surcharge is adjusted monthly.

The upcoming EU Maritime Regulation, effective January 1, 2025, will impact bunker costs. Ships must reduce their GHG emission intensity by 2% compared to the 2020 baseline. Compliance can be achieved either using alternative fuels (such as biofuel) or by paying compulsory compensation for non-compliance.

The cost of the partially necessary biofuel will increase the total bunker bill, consequently raising the BAF. The BAF applicable for January 2025 will be determined based on the notations of MGO and biofuel for the period from 25.11 – 26.12.2024 and will be communicated on 27.12.2024.