Private German investment bank Berenberg is entering the field of European carbon emissions trading.
The Hamburg-based lender is targeting shipping companies looking to trade their European Union Allowances (EUAs) from 2024 onwards.
Under the EU Emissions Trading System (ETS), companies will have to surrender carbon allowances in September 2025 for their European voyages in 2024.
Companies will be able to purchase the EUAs via Berenberg, which has around 400 international shipping customers.
“With the purchase of EUAs in line with the provisions for the shipping industry and their safe custody in special EUA securities accounts, we are helping shipping companies to meet a new EU-wide requirement for carbon emissions offsetting as efficiently as possible,” head of shipping Philipp Wunschmann said.
The ETS requires companies that generate electricity from fossil fuels to purchase certificates equivalent to the volume of CO2 they emit.
Shipowners have to decide whether to buy futures; buy allowances in the spot market or auctions throughout 2024; or buy allowances in 2025 when they are due.
Prices have been driven up year on year after the EU set a more ambitious target for lowering greenhouse gas emissions by 2030.
Arne Christian Rahner, head of financial markets at Berenberg, said: “The EUA market is still a young one. Recent years have been characterised by sharp price rises and dynamic price movements.
“This makes it all the more important to develop efficient solutions in good time and in cooperation with a trusted and experienced banking partner.”
Under the ETS, ships within the catchment area — European waters — must pay for their right to pollute by buying an EUA. Each allowance maps to one tonne of CO2 emitted. Under the scheme, “the polluter pays”.
In other words, the party that buys the fuel is responsible for purchasing EUAs.
The ETS applies to CO2 emissions from all ships of more than 5,000 gt in 2024 reported under the EU’s Monitoring, Reporting & Verification (MRV) system.
Those vessels will need to buy EUAs to cover half of their greenhouse gas emissions to and from EU, Norwegian and Icelandic (EEA) ports.
They will also need to buy allowances for all emissions for voyages and while at berth at EEA ports.
The MRV in 2026 will also require the reporting of methane and nitrous oxide emissions from ships, with EUAs to be paid on 100% of the CO2 equivalent of those emissions, in addition to CO2, within the ETS from 2027.
