UECC Embraces EU Emissions Trading System
In response to the evolving regulatory landscape, United European Car Carriers (UECC), a renowned operator in the automotive logistics industry, has shifted to a universal model rooted in a well-established industry framework. Beginning in 2024, the EU Emissions Trading System (EU ETS) mandates shipping companies frequenting European ports to obtain carbon credits, known as EU Allowances, equivalent to their annual CO2 emissions.
This essentially places a value on the use of fossil fuels, tying it to the price of EU Allowances, currently around €80. This cost is set to filter through the industry’s value chain, with the burden held by the pollutant in alignment with the regulation’s guiding principle. Thus, the challenge is measuring these additional fuel expenses accurately and fairly across all stakeholders, not least the cargo owner.
Addressing the Challenge of Carbon Emission Cost Calculations
This mechanism presents an administrative and financial burden on cargo owners due to potential discrepancies in shipping lines’ emissions cost formulae. “A cargo owner should be liable for the emissions generated from its cargo shipment, nothing more, nothing less,” points out Daniel Gent, UECC’s Energy & Sustainability Manager.
Contrarily, some cargo owners might receive a bill for emissions exceeding what their logistical operation necessitates, raising questions over cost-effectiveness and fairness. To tackle this challenging predicament, UECC adopted a calculation methodology based on the Ro-Ro GHG Emissions Accounting Guidance.
UECC and the Ro-Ro GHG Emissions Accounting Guidance Strategy
The Ro-Ro GHG Emissions Accounting Guidance standardizes shipment emissions reporting, transport activity, and carbon intensities, enhancing transparency and harmonizing calculations. Leveraging industry and international standards on carbon accounting, it embraces principles from the GLEC Framework and ISO 140832, a latitude that aligns with the IMO’s Energy Efficiency Operation Index.
“This existing regime is already widely used by cargo owners for ESG reporting, making it a logical choice for EU ETS calculations,” Gent says. The goal is to offer predictability and transparency to clients, allowing an upfront understanding of emission costs, and fostering a system that eliminates redundant administrative tasks.
UECC’s Strategy for Carbon-Effective Shipping
UECC uses fleet average carbon intensity to determine carbon costs. The carbon intensity, measured as CO2 emitted per CEUkm (Cargo Equivalent Units), is multiplied by the cargo volume and the shortest feasible distance between the loading and discharge points to determine the tons of CO2 emissions. This calculation is then multiplied by the average EUA auction price on the European Energy Exchange within a designated reference period.
UECC’s Green Shipping Intentions
“Comprehensive collaboration among industry stakeholders towards decarbonization is necessary,” states Masanori Nagashima, UECC’s Senior Manager of Business Planning and sustainability. By actively enhancing vessel utilization and backing green technologies, carbon intensity can be reduced.
He highlights that cargo owners are increasingly intent on capitalizing on carbon reduction when procuring shipping services to fulfill their ESG targets. “Investing in green shipping technologies can help cut carbon footprints and consequently lower EU ETS costs, enabling clients to pursue their sustainability goals economically,” Gent emphasizes.
Looking Forward: UECC’s Pursuit for Greener Shipping
UECC has a strategic roadmap to reduce fleet carbon intensity. The company’s investments in green shipbuilding projects have led to significantly greener vessels. Their innovative fleet, powered by a dual-fuel LNG and battery hybrid system, is also future-proof, capable of running on low-intensity carbon fuels as they become available.
“The EU ETS’s cap-and-trade system aims to incentivize the transition to low-carbon technologies, making traditional fuel options relatively more expensive,” Gent outlines, highlighting UECC’s commitment to actualizing this principle in the shipping industry.
