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THE shipping sector is on the brink of undergoing substantial structural reforms, driven by the imminent implementation of the EU ETS (European Union Emission Trading System) across the industry, set to commence next year, reports Hellenic Shipping News Worldwide.
In its most recent weekly report, the Greek shipbroker Intermodal declared that as the new year approaches, the maritime industry is on the cusp of transformation because of the EU ETS.
This development signifies more than a mere regulatory update; it marks a redefinition of industry standards, said the Intermodal report.
The EU ETS, planning to introduce 80 million Emission Unit Allowances (EUAs) into the market, represents a pivotal step toward rigorous carbon regulation, aiming to achieve a 55 per cent reduction in emissions by the year 2030.
"Shipping companies are set to encounter a phased compliance requirement, starting with 40 per cent allowance submission in 2024, escalating to 70 per cent in 2025, and achieving 100 per cent by 2026," said research analyst Chara Georgousi.
"The economic implications are substantial, with the sector potentially incurring costs between EUR8 billion (US$8.7 billion) to EUR10 billion by 2026. The carbon pricing within the EU ETS noted for its volatility, will significantly shape the operational costs (OPEX) of fleets and investment strategies."
"Companies must strategically manage their carbon footprint and adjust to the evolving cost landscape of emissions allowances. Factors like regulatory changes, auction supply, and environmental targets will greatly influence these prices," said Ms Georgousi.
"On top of that and against this backdrop of high volatility, the EU ETS is on the brink of significant changes that will notably influence operational costs and investment strategies."
"In a pivotal shift confirmed by the European Commission's adopted regulation, still awaiting formal approval by the EU Council and Parliament, the EU ETS will see its annual compliance deadline for stationary installations and the aviation sector change from April 30 to September 30, 2024," said Ms Georgousi.
"This adjustment is expected to disrupt the conventional EUA pricing patterns. Rather than the typical spring increase in EUA prices, a transition towards a summer price rally is now anticipated, which could markedly alter trading dynamics and affect market liquidity."
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