A recent academic study from Erasmus School of Law, Erasmus University Rotterdam, highlights a significant challenge for shipowners and ship managers operating under the EU Emissions Trading System (EU ETS). The study concludes that while these entities are mandated to pay for emissions, their legal right to reclaim these costs from the charterers or operators who largely control the vessel's emissions-generating activities is often unenforceable.
This situation arises because the EU Directive, which includes a "reimbursement right," lacks the necessary mechanisms or clarity to ensure that the financial burden of carbon emissions is effectively passed down the supply chain to the party with operational control over the vessel's emissions profile. Consequently, the party legally obligated to pay for the emissions may not be the party with the most direct influence over reducing them.
For freight forwarders and shippers, this finding suggests potential implications for future contract negotiations and freight rates. If shipowners are unable to recover EU ETS costs from charterers, they may seek to incorporate these expenses directly into their base freight charges. This could lead to increased shipping costs for cargo owners, as carriers adjust their pricing models to account for the unrecoverable carbon costs. Forwarders should anticipate these potential rate adjustments and advise clients accordingly, possibly exploring longer-term contracts that clearly define carbon cost allocation.
The study implies a need for clearer regulatory frameworks or contractual clauses to ensure that the polluter pays principle is upheld more effectively within the maritime sector's EU ETS compliance.
