The Worldscale Association will exclude EU Emissions Trading System (ETS) costs from its tanker voyage flat rates when the regulation's shipping provision comes into effect next year.
"No allowance for EU ETS will be included within the Worldscale rates themselves," the association said today after consulting the industry on the issue.
But the association will publish a baseline number of EU Allowances (EUAs) for a given route that shippers will need to surrender to comply with the regulation.
"With some exceptions, numbers of EUAs based upon the Worldscale round voyage will be provided alongside Worldscale rates," it said.
Effective next year, shipping's inclusion in the ETS will add an additional cost to shippers, not just for tankers but for all commercial shipping segments, calling at EU ports. In 2024, shippers will be required to surrender allowances covering 40pc of eligible emissions, with the figure rising to 70pc in 2025, and 100pc thereafter.
EU ETS compliance only small share of freight rate, for now
In current market conditions, the costs are only a fraction of total freight rates. For example, EU ETS compliance for a Houston-Rotterdam Aframax round-trip would cost $1.15/t, according to Argus assessments. This figure is equivalent to Worldscale (WS) 5, less than 5pc of the going freight rate on the route of WS110.
But compliance costs are not static. They will rise over time in line with the phased-in implementation of the regulation, and would also rise if the EUA price rises.
The Worldscale Association's flat rates underpin global spot freight trading for clean and dirty tankers.
