What will the 2nd half of 2022 bring to the climate agenda?

As summer is coming to an end, the maritime world is entering what may be a very hectic period. Companies have been working on their decarbonization plans for years, however, this autumn will be the make-or-break period for many.

The EEXI will become effective starting next January, and indications are that many vessels in their current state cannot achieve the required target values, which will in turn necessitate owners to make the required modifications. Given the relatively good shipping markets up till now, I suspect most owners have postponed this work to benefit from the markets and we could thus now be facing a bottleneck situation for modification work leading up to the deadline.?

As engine power limitation seems to be the preferred solution for most owners, what will this do to the supply/demand situation in the medium term? How will owners play the market? Short terms gains or long-term survival?

Also, this autumn we should see the finalization of the EU’s ETS regulation upgrade, where shipping is included. To me, an interesting question will be whether there will be a “hard” start-up i.e. will 100% of emissions be covered by EUAs from day one? With the current carbon price in the mid-80s level, there could be a considerable cost to be included in the coming budgets and cashflow estimates. A question here remains as to how shipping companies will structure the pass-on of these costs to the consumers. Liner companies will need to review their BAF (Bunker adjustment) formula and in the tramp markets, an understanding between the owners and the charterers will need to be reached. With companies not being allowed to coordinate these procedures, we could be seeing considerable differences in the approaches.

As if that was not enough to concentrate on, we also have the CII, the FuelEU, the EU Fuel Tax Directive revision and a few other climate actions to keep in mind. So yes, autumn 2022 will be very interesting indeed.?

-Poul

Questions on what is coming? Reach out to Poul at?[email protected]?for a discussion on strategic as well as regulatory climate and environmental issues and how we can help you at The Shipping Collective.