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Argus launches Carbon Cost of Freight indexes for pricing of emissions from ships

18 Aug 2022

Energy and commodities price reporting agency Argus on Tuesday (16 August) said it has launched daily Carbon Cost of Freight (CCF) indexes to help businesses involved in transporting a wide range of commodities with accurate pricing of the emissions from their ships. 

Offsetting shipping emissions is becoming compulsory under EU legislation passed this summer.

The Argus CCF prices give an insight into the cost of emissions generated when moving crude oil, refined products, LPG, coal, iron ore, grains and petroleum coke into or from the EU. They are published as lump sums paid per cargo and as $/t rates, as well as in $/bl for certain crude grades.

The European Parliament on 22 June voted to speed up the inclusion of shipping emissions into the EU emissions trading system (ETS). Shipowners will be obligated to hold EU emissions allowances for their emissions on trade routes that include calling at EU ports. The latest proposal states that from 2024, shipowners would have to cover 100pc of their emissions if the voyage is between EU ports. For voyages that start or end in an EU country, it would be 50pc of emissions for 2024-26, increasing to 100pc from 2027.  

The new legislation means that there will be an additional cost for every tonne or barrel of cargo imported to or exported from the EU, which will have to be accounted for by both shipowners and participants involved in trading the commodities that are being shipped. Argus CCF indexes provide the market with accurate references to manage this exposure.

“As the energy transition gains pace, the effect that freight will have on commodity trade will only grow in complexity,” Argus Media chairman and chief executive Adrian Binks said. “So we are delighted to offer Carbon Cost of Freight indexes to the market as a tool for participants to deal with that complexity.”

Argus CCF indexes are based on the type and amount of fuel consumed on each voyage, using assumptions about vessels specifications, speed and fuel consumption, both while at sea and during port operations. All assumptions are the product of an extensive market survey and are reviewed regularly.

The CO2 price component is the Argus assessment of the December-delivery EU ETS allowance price, converted to $/t. The new indexes are part of the daily Argus Freight service.

 

Photo credit: Argus Media
Published: 18 August, 2022

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