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Insights EU Allowances

EU Allowances

EU ETS Dec. 13, 2023
EU Allowances

Understanding the EU Allowances

Imagine a marketplace, but instead of buying and selling goods, participants trade in carbon emissions. That’s the essence of the EU Emissions Trading System (EU ETS).

EU Allowances (EUAs) represent a form of carbon permission granted to companies participating in the EU ETS, permitting them to release a specific quantity of CO2 emissions. These EUAs can be traded in the marketplace, and their fluctuating market value mirrors the expense associated with emission reduction.

Your EU Allowances usage depends on three factors: how much CO2 your ships emit in a year, how much of those emissions are covered by the EU ETS, and how much the emission allowances cost in the market. 

Calculate your CO2 Emission

Webinar Replay

Dan-Bunkering's partnership with GRM in EU Allowance Procurement

Rewatch our Webinar Sailing Through Compliance and learn more about how we can help you with your EU Allowances strategy. 

Amy Barty, Head of Sales Execution Desk from Global Risk Management tells you more about what are the crucial steps in EU Procurement and compliance. 

EUA Price Example Updated 2

Cost Example on Sailing Intra EU

Here is a practical example of how much your costs are going to change from next year. This calculation shows that by 2026, when the EU ETS is fully implemented, your costs will rise by 50%. 

The example assumes that the trip is an Intra EU trip and the EUA price is fixed. 

How to Get Emission Allowances

Primary Market

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The European Energy Exchange (EEX) conducts auctions where you can bid for EUAs. These auctions are the main way new EUAs enter the market. Remember, the number of EUAs available decreases each year, so planning your bidding strategy is crucial.

Secondary Market

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If you can’t acquire EUAs through auctions, or need more at a later date, you can turn to the secondary market. Here, EUAs can be traded bilaterally or through various derivatives offered by financial institutions.  It’s important to note that shipping companies will not receive any free allowances. This means you’ll need to actively acquire EUAs to cover your vessels’ emissions and thus need trustworthy forecasts of your CO2 emissions. 

Partnership with Dan-Bunkering

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Purchasing strategies can be designed to mitigate price risk while limiting capital intensity. Explore the carefully tailored options that align your aspirations with the physical operations of your esteemed shipping enterprise. 

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  • EUA Trades With Dan-Bunkering

    We offer tailored options that are designed to make compliance work for you.

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  • Tailor-Made Purchasing Plans

    Precision in every purchase, driven by data-backed strategies. Gain a competitive edge navigating the dynamic EU ETS landscape. Seamlessly integrate financial solutions into your operational plan for enhanced efficiency.

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  • Flexible Spot Trading

    Trade EUAs on your terms, extending beyond traditional market hours. Customize quantities precisely to match your unique trading requirements. Access Global Risk Management's extensive inventory for improved liquidity and seamless transactions.

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  • Forward Contracts

    Strategically manage price risk for future EUA trades. Ensure future allowance availability with certainty. Reduce capital intensity, allowing for more effective financial planning.

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  • EUA Trades With Dan-Bunkering
  • Tailor-Made Purchasing Plans
  • Flexible Spot Trading
  • Forward Contracts
Registry Book Pres (1)

Are you operating outside the EU?

Discover the complexity of the EU ETS Registry with our comprehensive e-book. It provides step-by-step instructions on opening a Trading or Operator Holding Account, details about fees, application forms, and contact information. This valuable resource is available for download on our website, offering you the guidance you need at your fingertips.

 

Download E-book

  • Optimize your EU Allowances Strategy

    Explore a partnership with Dan-Bunkering and Global Risk Management (GRM) and get tailormade purchasing plans for your company.

    Reach out and learn more
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