Shipping Industry in the EU ETS
Since 2024, the EU Emissions Trading System (ETS) is expanded to include the maritime industry. This means that vessels making port calls within the European Economic Area (EEA) incur a cost for their carbon emissions. There is a discount for the first two years to ease the transition. However, from 2027 onwards, the cost of emitting carbon is projected to exceed 8 billion euros annually.
Services we offer
To help ship owners, managers, and charterers adapt to these new regulations efficiently, Grey Epoch Europe offers comprehensive support in navigating the emissions landscape.
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Spot trading
Buying EUAs in the spot market is the most straightforward way of transacting in the EU ETS. In a spot transaction you agree on a price today and settle the transaction the following day.
There are various ways to execute a spot transaction. We can provide you with the current market price, you can give us the price at which you would like to execute, or we can use a benchmark such as the settlement (closing) price.
All trades will be executed transparently by Grey Epoch Trading, with clearly communicated and predetermined trading fees.
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Forward Buying
Price certainty is vital for financial planning. Buying forward fixes emissions prices for a period without large upfront investments. It ensures clear and transparent payments based on published market prices, providing certainty about future emissions costs.
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Doing Business without MOHA
Grey Epoch Europe provides access to solutions for companies awaiting the opening of their MOHA or Trading Account, or who prefer not to open an account.
We provide access to solutions that enable you to fix the price of EUAs. You can then choose to have them transferred once your account is opened, or instruct us to transfer the EUAs directly to a third party, such as the owner or manager of a vessel.
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Cash Flow Optimisation
After generating emissions, EUAs must be surrendered by September of the following year. During this period, EUAs remain in your registry account. However, you have the option to temporarily convert these EUAs into cash for a fixed duration, allowing you to access funds while knowing they will be returned to your account before the compliance date. This flexibility ensures financial support without compromising your compliance obligations.
FAQs
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The European Commission has adopted legislation that sets out who will be legally responsible to surrender EUAs. Opposite to what the market was expecting, the default responsibility will be with the owner of the ships and not the manager.
The regulation sets out that the entity that has assumed the responsibility for the operations of the ship from the shipowner, such as a manager, will be responsible for surrendering EUAs only if it has been duly mandated by the shipowner to do so. That same entity would have to provide the administering authority with a document that clearly states it is mandated by the shipowner to comply with EU ETS obligations. The document needs to be signed by that entity and the shipowner. In absence of such a document, the shipowner shall be considered as the entity responsible for EU ETS obligations.
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Ships from 5,000 gross tonnage will be included in the EU ETS from 2024. Ships from 400 gross tonnage might be included from 2027.
Allowances are needed for 40% of verified emissions in 2024, rising to 70% for 2025 and 100% for 2026.
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Part of the proceeds will be allocated to the Innovation Fund. The fund supports, among other things, investments aimed at facilitating the decarbonisation of maritime transport.
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Companies that have not surrendered enough allowances to cover their regulatory obligation, will be fined €100 per allowance for the entire shortage. Additionally, the company still needs to surrender the allowances in retrospect.
If a company does not comply for two consecutive compliance periods, its vessels can be barred entry or confiscated by a Member State.
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From 2024, for ships departing or arriving to/from an EEA port, 50% of the emissions will be counted. This might increase to 100% in 2028, depending on the measures taken by the IMO and third-party countries.
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An Operator Holding Account (OHA) is a registry account for companies with a compliance obligation. The account allows you to send, receive and surrender allowances.
For EU shipping companies, the OHA must be opened in the Member State where the shipping company is registered.
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A Trading Account (TA) is a registry account that anybody can open. The account allows you to send and receive allowances.
Shipping companies can already open a TA at any of the Member States. In our experience, Malta has a relatively swift turnaround time of about 6-8 weeks.
It is recommended that shipping companies open a TA as soon as possible so that they can send and receive allowances.
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The EU ETS operates on a "cap-and-trade" principle. It sets a maximum limit (cap) on greenhouse gas emissions for various industries, including the maritime sector. Emission allowances are available through the ICE and EEX exchanges, where they are traded on the secondary market and brought into circulation through auctions.
Maritime companies must acquire Allowances for the carbon that their vessels emit. This market-driven approach incentivizes emission reductions and fosters an overall decrease in carbon emissions within the EU
Grey Epoch Europe
Grey Epoch Europe is the group’s client facing entity, bringing together years of expertise to help our customers navigate the emissions landscape. The Grey Epoch Group also includes Grey Epoch Trading, whose traders have been active in the EU Emission Trading System since its inception with market activities representing over 7.5 billion EUAs since 2017. We pride ourselves in being able to provide our customers access to the solutions that Grey Epoch Trading offers, combined with our know-how to manage your emissions allowances risks.
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Experts in environmental markets
The Grey Epoch Group has extensive experience in emissions markets. Grey Epoch Trading has been trading the emissions space as a team for over a decade, making them one of the most experienced participants in the emissions market.
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Solutions structuring
At Grey Epoch Europe, we work together with our customers to translate their specific requirements to tradable structures, which helps them implement risk management solutions.
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In direct touch with the market
We’re able to help our customers avoid unnecessary intermediation cost as our parent company, Grey Epoch Trading, trades directly in the marketplace.
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Largest liquidity provider
Grey Epoch Trading is the largest liquidity provider of exchange-traded emissions options*. Their market exposure allows us to provide our customers access to value adding, bespoke solutions.
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Risk-management solutions
The Grey Epoch Group are experts in emissions options, which are at the foundation of risk-management solutions.
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High Market Volume
In 2021, our market activities represented over 2.3 billion tonnes of greenhouse gasses, which is more than the amount emitted by all companies in the EU ETS together that same year.
Who we are
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Edmund Lehmann
Ed is an experienced business developer and trader, now heading up Grey Epoch’s European business. Prior to Grey Epoch Europe, Ed spent 15 years in commodities. At Shell Ed was bringing projects to a financial close in the natural gas and power sectors, and later spent five years trading Crude Oil. At BG, he built up the North West Europe physical and financial trading business, transforming it from passive term seller of crude oil to active trader of physical oil and financial derivatives. Ed has an MBA from IESE Business School in Barcelona.
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Emilio Fontana
Emilio joined Grey Epoch in 2021 as Business Development Manager, having previously spent four years primarily in structured product and solution sales at BNP Paribas. Emilio started his career in Amsterdam before moving to London, and holds a BSc in Economics, MSc in Finance, and an MSc in Econometrics from VU University, Amsterdam.
Emilio is the focal point for Grey Epoch Europe’s customers and would be happy to help you manage your emissions allowance risks.
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Victoria Basterra Gil
As a member of the business development team, Victoria brings business expertise and fluency in three languages: Spanish, French, and English to Grey Epoch. Victoria has completed a Business Administration undergraduate degree from Deusto Business School in Bilbao, Spain, and later gained valuable experience at Respol pursuing her passion for environmental issues and relocated to DARE for experience in traded markets. Her diverse experiences in both London and Madrid, contribute to her valuable international perspective in supporting clients with their emissions-related challenges.
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Beatriz Marques
Bea has built up extensive expertise in marketing, communications and project management at Provenca Capital, UK Trade and Investment, and a leading automotive engineering firm.
Bea was born in Portugal, raised in the UK, and has worked in Sao Paulo, Barcelona, and London. She holds a first-class degree in International Relations and a Master’s in Marketing Management.
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Grey Epoch Europe Limited (FRN: 959638) is an appointed representative of Thornbridge Investment Management LLP (FRN: 713859) which is authorised and regulated by the Financial Conduct Authority.
*Grey Epoch Trading, brand of name Grey Epoch LLC, has been #1 liquidity provider of EUA options on the ICE exchange from 2013 - 2022.