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Customer Update – EU Emissions Trading System (ETS) UPDATE

Starting from January 1, 2024, the EU Emissions Trading System (EU ETS) will encompass the maritime sector after receiving approval from the EU Council in April 2023.

Implementation of the EU ETS in the Maritime Sector
As a result of this compliance-based carbon pricing measure, vessel owners and operators, including Samskip, will be required to purchase Emission Unit Allowances (EUA) annually to cover CO2 emissions, as part of the ‘cap and trade’ principle introduced by this new regulation. This means that Samskip routes within Europe and the UK will now fall under the EU ETS scheme[1].

Regarding routes connecting EU and the UK, the EU Emissions Trading System (ETS) will be applicable, covering 50% of the emissions. However, the UK has plans to establish its own UK Emissions Trading System (UK ETS) by 2026, which will specifically focus on regulating emissions from domestic voyages[2].

Implications of the EU ETS for our customers
As we hold the integrity of our relationship with our customers in high regard, it is important for us to be transparent about the impact that the EU ETS will have on our business and activities. This carbon-tax will be applied as a separate charge over and above the base freight rate from January 1st 2024. We feel it is important to inform you on this to ensure transparency in our actions.

Our commitment to sustainability and to our customers
Given our dedication to sustainability, we will continue to prioritize the integration of sustainable and innovative technologies on our vessels moving forward. These investments are driven by our desire to minimize the effects of carbon-related taxes on our operations. Through our efforts, we have significantly increased the utilization of biofuels on our vessels since 2021. This not only helps us mitigate the cost impact of the EU ETS but also allowed us to decrease our carbon footprint by 10.4% compared to the levels observed in 2020. Additional information about our efforts towards sustainability can be found in our latest sustainability report.

EU ETS implementation phases
The application of the EU ETS will be implemented gradually in three phases, as outlined below:

  • - In 2024, 40% of emissions will be included.
  • - In 2025, 70% of emissions, and
  • - Starting from 2026, the system will cover 100% of emissions.

Further information
This is the first communication about the EU ETS. We intend to give more detailed information about the EU ETS and its application at Samskip in the coming weeks. It will be sent directly to you and published on our website: www.samskip.com/sustainability/

[1] For official and detailed EU communication about the topic please visit https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets_en
[2] For official and detailed UK communication about the topic please visit https://www.gov.uk/government/collections/uk-emissions-trading-scheme-uk-ets-technicalguidance-
and-tools