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November 2012

International Group P&I Clubs 2013/14 Policy Year Strategies

The European Union’s Emissions Trading System (EU ETS) was extended to cover emissions from shipping as of 1st January 2024.

The EU ETS is limited by a 'cap' on the number of emission allowances. Within the cap, companies receive or buy emission allowances, which they can trade as needed. The cap decreases every year, ensuring that total emissions fall.

Each allowance gives the holder the right to emit:

  • One tonne of carbon dioxide (CO2), or;
  • The equivalent amount of other powerful greenhouse gases, nitrous oxide (N2O) and perfluorocarbons (PFCs).
  • The price of one ton of CO2 allowance under the EU ETS has fluctuated between EUR 60 and almost EUR 100 in the past two years. The total cost of emissions will vary based on the cost of the allowance at the time of purchase, the vessel’s emissions profile and the total volume of voyages performed within the EU ETS area. The below is for illustration purposes:
  • ~A 30.000 GT passenger ship has total emissions of 20.000 tonnes in a reporting year, of which 9.000 are within the EU, 7.000 at berth within the EU and 4.000 are between the EU and an outside port. The average price of the allowance is EUR 75 per tonne. The total cost would be as follows:
  • ~~9.000 * EUR 75 = EUR 675.000
  • ~~7.000 * EUR 75 = EUR 525.000
  • ~~4.000 * EUR 75 * 50% = EUR 150.000
  • ~~Total = EUR 1.350.000 (of which 40% is payable in 2024)
  • For 2024, a 60% rebate is admitted to the vessels involved. However, this is reduced to 30% in 2025, before payment is due for 100% with effect from 2026.
  • Emissions reporting is done for each individual ship, where the ship submits their data to a verifier (such as a class society) which in turns allows the shipowner to issue a verified company emissions report. This report is then submitted to the administering authority, and it is this data that informs what emission allowances need to be surrendered to the authority.
  • The sanctions for non- compliance are severe, and in the case of a ship that has failed to comply with the monitoring and reporting obligations for two or more consecutive reporting periods, and where other enforcement measures have failed to ensure compliance, the competent authority of an EEA port of entry may issue an expulsion order. Where such a ship flies the flag of an EEA country and enters or is found in one of its ports, the country concerned will, after giving the opportunity to the company concerned to submit its observations, detain the ship until the company fulfils its monitoring and reporting obligations.
  • Per the EU’s Implementing Regulation, it is the Shipowner who remains ultimately responsible for complying with the EU ETS system.

There are a number of great resources on the regulatory and practical aspects of the system – none better than the EU’s own:

‍https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20230605

‍https://climate.ec.europa.eu/eu-action/transport/reducing-emissions-shipping-sector_en

‍https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/what-eu-ets_en‍

Degerli Müsterilerimiz, Sayin Ilgili,

Uluslararasi Grup Kluplerinin yeni police yili için belirledikleri stratejiler asagidaki tablomuzda genel hatlari ile özetlenmeye çalisilmistir. Ayrica Kluplerin münferit sirküleri daha fazla detayli bilgi için ekte yer almaktadir.

Klupler üyelerinin genel performanslarina göre gerekirse ilave sartlar isteyebilecektir.

Önceki yillarda oldugu gibi Group Excess Reinsurance Programindaki bir önceki yila göre çikan masraf farkinin (su an için belli degil) yeni dönem için anlasilan primlere ilave edilmesi planlanmistir. (istisna klup/ler için tabloya bakiniz.)

Standard Europe (London Class) ve Swedish Club su an itibari ile henüz açiklama yapmamistir.

2013/14 poliçe yili itibari ile kluplerin üzerlerinde tuttugu risk limiti (Club’s retention) $8 milyondan $9 milyona çikartilacak. Böylece kluplerin ortak paylasacagi risk limiti (Pool retention) $9 - $60 milyon arasi olmus olacaktir.  Bilindigi üzere $60 milyon - $2,060,000 arasi ise Group Excess Loss Reinsurance Programme olarak düzenlenmektedir.

Kluplerin sirkülerlerine bakildiginda genel artislar ve “Club retention” ($8 milyondan $9 milyona) seviyesindeki artislarin ortak sebepleri olarak su hususlar göze çarpmaktadir.

-          Uluslararasi konvansiyonlardaki tazminat limitlerinin artmis olmasi

-          Emtea degerleri, tedavi masraflari,ölüm, yaralanma tazminatlari, ekspertiz, hukuki destek giderlerindeki artislar

-          2012’nin ilk yarisi itibari ile bir önceki yilin ilk yarisindaki “pool claims” ($9 mil. - $60 mil katman) adet olarak olarak artmis (7’den 8’e), meblag olarak ise 130% gibi ciddi bir artis göstermistir.

Tablomuz email içersindeki formatinda görüntülenememesine karsilik ekte “Word” dosyasi olarak da sunulmustur.

Dear Sirs,

The following are 2013 / 14 policy year requirements by the International Group Clubs. For detailed information please see attached zip file in which individual circulars are kept.

Further adjustments may apply based on member's general performance. It is planned that the agreed rates will further be adjusted to reflect any changes in the cost of the International Group Excess Loss Reinsurance Programme – which is not known at the moment. (please see the table for any exceptions.)

Standard Europe (London Class) and Swedish Club are yet to announce.

Club retention to increase from $8 million to $ 9 million with effect from 20 February 2013. This means Pool Retention to be between $9-$60 million. $60 million and $2,060 million forms the layer called Group Excess Loos Reinsurance Programme.

Looked at all clubs’ circulars, following points surface as to reasons for the general increase of premiums and Club retention ($9 mil. from $8 mil.)

-          Increased limits under existing international conventions

-          Increase in cargo values, hospitalisation, treatment, death/injury compensations, expertise and legal costs

-          Increase of Pool claims ($8 mil - $60 mil. layer) in number (8 from 7) but a hefty 130% increase in 2012 first half compared to that of 2011 year.

The table has also been prepared as “Word” attachment in case the format looks out of order in certain devices.

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