Maritimes.gr

April 5, 2024

The ESG Shipping Awards proudly announces the successful conclusion of its latest event: “ETS in Action: Bridging the Gap Between Traders & Engineers,” held at the Grand Hyatt Athens on March 29, 2024. This workshop, dedicated to promoting sustainable practices within the maritime industry, focused on the pivotal role of the Emissions Trading System (ETS) in aligning the efforts of traders and engineers towards achieving compliance and fostering cost-effective strategies.

Featuring engaging discussions led by prominent figures and industry experts in the ETS landscape, the workshop offered participants a comprehensive understanding of emissions trading dynamics, invaluable insights, practical knowledge, and best practices essential for navigating the complexities and opportunities presented by emissions trading. From regulatory frameworks to practical implementation strategies, attendees gained relevant understanding aimed at enhancing their proficiency in emissions management.

The success of “ETS in Action: Bridging the Gap Between Traders & Engineers” underscores the importance of collaborative initiatives in addressing environmental challenges within the maritime sector. As the industry continues to evolve, the ESG Shipping Awards remains steadfast in its commitment to championing sustainability and fostering responsible practices.

Key points :

Mr. Manolis Koutoulakis, Secretary General of the Ministry of Maritime Affairs and Insular Policy, emphasized the significance of the ESG Shipping Awards initiative in promoting knowledge and awareness of sustainable development among shipping companies and he mentioned the ministry’s efforts to support sustainable initiatives in the maritime sector.

Dr. George Pateras, President of the Hellenic Chamber of Shipping, highlighted a potential risk associated with the Emissions Trading System (ETS) for shipowners, indicating that they may need to purchase additional EUAs (European Union Allowances) to safeguard their companies.

Maruxa Heras, Head of Shipping at Global Factor, pointed out a key challenge in implementing the EU ETS within the maritime industry: the allocation of responsibility and cost, highlighting the complexities involved in determining which entities within the maritime sector should bear the financial burden of emission reduction measures and how these costs should be distributed fairly and efficiently.

Miller Wells, a Carbon Market Specialist at Global Factor, stressed the dynamic nature of EU ETS prices, noting their tendency to fluctuate and be influenced by abrupt events which underscores the volatility inherent in carbon markets and emphasizes the importance of monitoring and responding to changes in market conditions.

Antoniadis Konstantinos, Managing Partner at Emicert, emphasized the significant scale of the EU ETS, describing it as the largest emissions trading system globally. He highlighted its role in incentivizing the transition from high-carbon fuels to more sustainable alternatives. Konstantinos noted the demand for emission allowances under the ETS has not reached its peak, indicating ongoing opportunities for market participation and he suggested that starting from 2027, the EU ETS will increasingly compel companies to adapt and actively seek technological solutions to minimize their carbon footprint and adhere to stringent emissions regulations.

George Zisis-Tegos, Head of the Department for Market Mechanisms and GHG Emission Registry at the Directorate of Climate Change and Air Quality, Ministry of Environment and Energy, provided insights into the implementation of the EU ETS within the shipping industry. He outlined the phased implementation of this obligation, and he noted that in Greece, 735 shipping companies are required to open a MOHΑ account for emissions trading. He explained the process of transferring funds between trading accounts and the MOHA account, as well as the reporting requirements at the end of each voyage to mitigate risks. He also underscored the importance of timely compliance with ETS obligations to avoid penalties.

Christos Kontorouchas, Head of Unit for Shipping Policy at the Hellenic Coast Guard, highlighted Greece’s unique pursuit of provisions regarding the transfer of liability within the EU ETS framework. Unlike other European countries, Greece advocated for this provision to grant shipowners more rights and facilitate compensation through substantive legal measures. This distinct initiative reflects Greece’s commitment to supporting its shipping industry and ensuring fair treatment under emissions trading regulations. He noted that the inclusion of this provision in joint ministerial decisions will involve Greek courts, indicating a concerted effort to address legal complexities and clarify the boundaries between shipping and investment activities. This underscores the importance of clear and comprehensive regulatory frameworks to navigate the challenges posed by emissions trading in the maritime sector.

Costas Constantinou, from Moore’s Global Leadership, compared the ETS to a financial instrument, similar to stocks, emphasizing its significance as a strategic asset. He advocated for its management by the Chief Financial Officer (CFO) of each company, citing their familiarity with the organization’s financial landscape and the requisite strategy. Mr Constantinou underscored that the ETS holds specific valuation methods and is susceptible to both profit and loss dynamics, implying its potential impact on the company’s financial performance. He also flagged institutional loopholes related to the taxation of ETS profits, stressing the need to address regulatory ambiguities swiftly. Mr Constantinou positioned the ETS as an integral component of shipping costs, characterizing it as an expense on the company’s balance sheet, further emphasizing the importance of prudent financial management and regulatory compliance in navigating the complexities of emissions trading.

Nikolaos Gouvalas, Carbon Market Specialist and Country Manager for Greece & Cyprus, emphasized the role of demand in shaping the price dynamics of the ETS. He attributed fluctuations in ETS prices to various factors, including industrial activity in Europe, correlations within the EU Emissions Allowance (EU A) commodity, and climate change considerations. Gouvalas highlighted the shipping industry’s hesitance to fully embrace the ETS and engage in trading, despite its global relevance. He underscored the significance of ETS best practices, particularly in terms of proactive monitoring and establishing trust within the market.

Ioannis Gemelos, Superintendent Engineer at Diana Shipping Services S.A., initially viewed the ETS as a continuation of the EU MRV framework, primarily as a technical aspect. However, he later recognized that the ETS holds significant commercial implications beyond its technical components. He recognized that some companies may choose to actively participate in carbon trading to capitalize on potential financial opportunities, while others may opt for a more conservative stance focused solely on meeting regulatory requirements.

Leonidas Margetis, Environmental & Sustainability Manager at Tsakos Shipping & Trading S.A., anticipated a transitional phase during the initial year of ETS implementation, noted the multifaceted nature of ETS compliance and the importance of holistic approaches to address the challenges and opportunities associated with environmental regulations. He underscored the necessity for companies to establish well-defined processes and proactive strategies to mitigate both market and legal risks associated with ETS compliance. He also emphasized the importance of verified per-voyage data for discussions with charterers, highlighting the significance of accurate information in negotiating terms and conditions.

Christos G. Timagenis, Attorney-at-law at Timagenis Law firm highlighted significant legal risks associated with the implementation of the ETS. He underscored the substantial resource requirements necessary for compliance, noting that many companies may struggle to meet these demands. His perspective underscored the importance of legal expertise and comprehensive risk management strategies to navigate the legal complexities and operational challenges inherent in emissions trading.

Sponsored by Global Factor & Moderated by Helena Athoussaki, Principal Organizer of the ESG Shipping Awards the workshop served as a crucial platform for fostering collaboration in the journey towards a more sustainable maritime industry.

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