ETS offers commercial opportunities

SEAaT (Shipping Emissions Abatement and Trading), the industry association dedicated to shipping emissions abatement and trading, has called for the involvement of the bunker fuel industry in discussions for the establishment of a shipping emissions trading scheme (ETS), citing strong commercial opportunities for the sector.

An ETS is currently under discussion at the IMO to encourage more efficient shipping and reduce greenhouse gas emissions from the global fleet. An ETS was launched successfully by the European Union for large land-based emitters in 2005 with the inclusion of aviation planned for 2012.

In UNFCCC and IMO discussions on reducing greenhouse gas emissions in the shipping sector, there is strong support for an ETS to operate under the auspices of the UNFCCC and IMO.

Under an ETS for shipping, either the ship operators or charterers would have to acquire carbon credits that reflect their bunker fuel consumption. Bunker fuel traders and suppliers could supply carbon credits in parallel to supplying fuel, using their existing trading infrastructure to secure the best carbon prices.

John Aitken, Secretary-General of SEAaT, said, “The ETS is by far the fairest, most commercially-viable means of encouraging more efficient fuel use. The bunker fuel companies are in an excellent position to both trade credits, and to support their customers in getting the best deal for their fuel, and helping drive environmental compliance strategies.”

Commenting on the current discussions on an ETS at the IMO and UNFCCC, Aitken continued:

“There are both multilateral discussions at IMO and UNFCCC, as well as among the trade associations. SEAaT would welcome the participation of fuel supply companies in these, as they have perhaps the most significant knowledge and experience of trading systems in the entire sector. We would also encourage them to develop knowledge of carbon trading by joining SEAaT as associate members and participating in the wider debate.”

The ETS used by the European Union involves greenhouse gas-emitting companies paying for a capped number of carbon-emitting allowances or ‘credits’. These ‘credits’ can then be traded openly like commodities or equities, with the price fluctuating according to demand.