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CircularsNews
January 2015

International Group P&I Clubs 2015 / 16 Policy Year Strategies - 4th circular

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

Dear Sir/Madam,

We refer to our third circulars in late November 2014 in respect of the General Increases. Since then, Japan and Swedish Clubs have also announced their general increase and our table now has its final look.

Also yesterday, the International Group Club’s common excess of loss reinsurance programme is finalised with the following improvements compared to 2014 year.  The retention of individual clubs before pooling will remain at US$9 million each claim. The Pool retention (being also, of course, the attachment point for the Group's general excess of loss reinsurance contract) will also remain unchanged for 2015 at US$80 million.

2014

2015

DIFFERENCE TO PREVIOUS YEAR

USD PER GT

USD PER GT

%

USD PER GT

DIRTY TANKERS

0.7963

0.7317

-8.113

-0.0646

CLEAN TANKERS

0.3415

0.3138

-8.113

-0.0277

DRY CARGO VESSELS

0.5203

0.4888

-6.055

-0.0315

PASSANGER VESSELS

3.7791

3.7791

0

0

2015 / 16

P&I

NOTES

American

+4.5%

Various deductible changes as per circular.

Britannia

+2.5%

Deductibles as expiry.

Gard

+2.5%

Deductibles below the standard deductibles for P&I in Rules Appendix V, para 2 to be increased with USD1,000 or up to standard deductible whichever the lowest.

Japan

+3%

London

+6%

Deductibles also to apply to correspondent/survey and legal fees and all deductibles below $15,000 to increase by $2,000.

North of England

+4.75%

Mandatory minimum premium rise is 2.5%. Deductibles: all crew and cargo deductibles below $25,000 will be increased by $2,000

Shipowners

0%

Deductibles as expiry and group reinsurance cost to be absorbed by Club

Skuld

No general increase but references made in circular to need for increase of premium for all members and furthermore members performance to be individually assessed.  Also standard rules deductibles to increase by $2,500.

Standard Europe

+5%

Deductibles also to apply to correspondent/survey and legal fees and all deductibles to increase by 10%. Where a deductible is lower than $10,000 a mandatory increase of $1,000.

Standard Europe(London)

0%

Deductible as expiry

Steamship

0%

Deductibles as expiry

Swedish

+2.5%

Crew deductible to increase by $1,000

UK P&I

+6.5%

Standard deductible will increase from USD 8,500 to USD 10,000 per event including fees and expenses.

West Of England

+2.5%

Deductibles to increase by 10% or $1,000 whichever higher subject to a maximum increase of $2,000.

2015 / 16

FDD

NOTES

American

+4.5

Various deductible changes as per circular

Britannia

0%

Deductibles as expiry.

Gard

+10%

Deductibles as expiry.

Japan

0

London

+6%

Deductibles as expiry.

North of England

+2.5%

Deductibles as expiry.

Shipowners'

0%

Deductibles as expiry.

Skuld

No general increase but references made in circular to need for increase of premium for all members and furthermore members performance to be individually assessed.  Also standard rules deductibles to increase by $2,500.

Standard Europe

+5%

Deductibles as expiry.

Standard Europe (London)

0%

Deductibles as expiry.

Steamship

0%

Deductibles as expiry.

Swedish

+5%

Deductibles as expiry.

UK Defence

0%

Further reductions to apply as per the membership periods

West of England

0%

Deductibles as expiry.

‍

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