Association of Average Adjusters warns of cost to shipping industry over net zero goals
The president of the Association of Average Adjusters said the shipping industry will soon be faced with the potential impact on overall average recoveries from tougher rules on preventing emissions.
Michiel Starmans called for increased awareness of what new levies planned as part of the green transition measures could mean for the assessment of compensation in the event of a ship accident.
Responding to the question of what the carbon levies meant for the overall average, Starmans said: “Based on cross-references of existing and future maritime legislation, I believe the carbon levies under ETS and IMO may be licensed in GA as a direct result of bunkers consumed and licensed in GEORGIA.”
Under the proposed legislation, CO2 emissions in shipping will no longer be “free”, Mr Starmans stressed. The aim is to incentivize the marine industry to invest in energy efficiency and switch to cleaner fuels with lower emissions.
The gradual lowering of an emission cap on total greenhouse gas emissions by participants, combined with the rising costs of purchasing carbon taxes, means that climate costs will increase year on year. year, and taxes could eventually exceed bunker costs for ships that have not switched to low-carbon fuels, Mr Starmans said.
The EU that wants to see zero emissions by 2050 has a set of measures that are subject to scrutiny by the European Parliament and require the approval of each member state. It includes an ETS, which would require shipping companies from 2023 to buy permits for ships over 5,000 gross tons to cover every ton of CO2 emissions. The emissions cap, which would be converted into tradable carbon permits, would increase in annual increments from 20% in 2023 to 100% in 2026.
An owner or time charterer would need to purchase permits covering 100% of emissions from voyages within the EU and 50% of emissions from international voyages beginning or ending in the EU.
If the company did not return the correct number of permits by April 30 of the following year, it would be fined 100 euros per tonne of CO2 not accounted for. Vessels can be refused entry to EU ports when the responsible shipping company has not surrendered a permit for two consecutive years.
Relevance to adjusters of these future carbon taxes could arise when a ship is retired for repair or when GA allowances are granted for fuel consumed while diverted to, or held in a port of refuge until that it resumes course under the applicable rules of York Antwerp, which regulate GA and are almost always incorporated into a charterparty or bill of lading.
At present, when deviating from General Average to a European port of refuge to carry out the repairs necessary for the safe continuation of the voyage, the emissions did not need to be compensated by the shipping company. , but as of January 2023, that “free ride” was about to change, Mr. Starmans said. The shipping company would have to settle the bill with the relevant EU Member State, which raised the question of whether the shipowner (or time charterer) could recover these additional costs in GA.
Regarding the EU fuel tax, Mr. Starmans does not foresee any problem in allowing in GA the gross price of fuel, including the EU tax, whereas currently the York-Antwerp rules allow the net price of fuel fuel.