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Mar 15, 2022
Lockton P.L. Ferrari

Newsletter 03-22

The European Union’s Emissions Trading System (EU ETS) was extended to cover emissions from shipping as of 1st January 2024.

The EU ETS is limited by a 'cap' on the number of emission allowances. Within the cap, companies receive or buy emission allowances, which they can trade as needed. The cap decreases every year, ensuring that total emissions fall.

Each allowance gives the holder the right to emit:

  • One tonne of carbon dioxide (CO2), or;
  • The equivalent amount of other powerful greenhouse gases, nitrous oxide (N2O) and perfluorocarbons (PFCs).
  • The price of one ton of CO2 allowance under the EU ETS has fluctuated between EUR 60 and almost EUR 100 in the past two years. The total cost of emissions will vary based on the cost of the allowance at the time of purchase, the vessel’s emissions profile and the total volume of voyages performed within the EU ETS area. The below is for illustration purposes:
  • ~A 30.000 GT passenger ship has total emissions of 20.000 tonnes in a reporting year, of which 9.000 are within the EU, 7.000 at berth within the EU and 4.000 are between the EU and an outside port. The average price of the allowance is EUR 75 per tonne. The total cost would be as follows:
  • ~~9.000 * EUR 75 = EUR 675.000
  • ~~7.000 * EUR 75 = EUR 525.000
  • ~~4.000 * EUR 75 * 50% = EUR 150.000
  • ~~Total = EUR 1.350.000 (of which 40% is payable in 2024)
  • For 2024, a 60% rebate is admitted to the vessels involved. However, this is reduced to 30% in 2025, before payment is due for 100% with effect from 2026.
  • Emissions reporting is done for each individual ship, where the ship submits their data to a verifier (such as a class society) which in turns allows the shipowner to issue a verified company emissions report. This report is then submitted to the administering authority, and it is this data that informs what emission allowances need to be surrendered to the authority.
  • The sanctions for non- compliance are severe, and in the case of a ship that has failed to comply with the monitoring and reporting obligations for two or more consecutive reporting periods, and where other enforcement measures have failed to ensure compliance, the competent authority of an EEA port of entry may issue an expulsion order. Where such a ship flies the flag of an EEA country and enters or is found in one of its ports, the country concerned will, after giving the opportunity to the company concerned to submit its observations, detain the ship until the company fulfils its monitoring and reporting obligations.
  • Per the EU’s Implementing Regulation, it is the Shipowner who remains ultimately responsible for complying with the EU ETS system.

There are a number of great resources on the regulatory and practical aspects of the system – none better than the EU’s own:

14th March 2022

The Standard and North P&I Clubs have announced their intention to merge. That intention will need to be approved by the respective membership and is subject to regulatory approvals. Their press release is attached.

P.L. Ferrari have a substantial and long-standing business relationship with both clubs and are positive about this development.

Whilst clearly a lot of detail will need to be clarified over the coming months we see headline benefits.

  1. Financial - the bigger entity will provide a stronger premium volume and larger capital base which will be helpful in reducing the pressure on reserves emanating from the increase in high value/pool claims thus diluting volatility. There will be cost synergies over time which will inure to the benefit of individual member by allowing more premium to address “within retention” claims. Overall there should be enhanced financial resilience
  2. Culturally - both clubs share many core values and a commitment to mutuality and the integrity of the International Group. Both clubs have in- house managers employed directly by their clubs. There will be greater opportunity for staff within the management organisation to develop and enhance their already first class offering.
  3. Best practice - both clubs consistently, and over time, in the top 3 clubs for service as analysed by our PLF View - P.L. Ferrari’s annual survey of all clubs’ Key Service Performance Indicators. We see the merged club taking the best of their offerings across claims, underwriting, loss prevention and general advisory to create a best in class service. This extends to a greater capacity for innovation.
  4. Product Diversity - both clubs offer additional products for their mutual membership. There is some overlap but also each club has unique products. The combined product diversity will offer members a wider choice.
  5. Industry leadership - the merged entity would be a powerful voice for shipowners across all maritime forums.

We would stress that the announcement is an intention to merge and is, as mentioned, subject to member and regulatory approval.

There will be more granular detail emerging over the next few months and P.L. Ferrari will keep our clients and friends up to date on all developments.

This newsletter, and our information archive, can also be accessed at

P.L. FERRARI & CO. S.r.l.

P.L.Ferrari – A Member of the Lockton Group of Companies

This newsletter is intended solely as an overview of the marine market and does not constitute any form of advice. It is based on sources believed to be accurate at the time of printing andwe cannot be held liable for the omission of any information within the newsletter.

North P&I and Standard Club announce mergerplan to create new global marine insurance force


Combination would establish a global marine insurer positioned to thrive in the face ofcurrent and emerging challenges and opportunities posed by digitalisation, recruitment,regulation and sustainability.

North P&I and Standard Club have entered formal discussions for a proposed merger to create anew global marine insurer and one of the largest providers of mutual cover in the maritimeindustries. With 300 years of shared P&I heritage, the combined mutual insurer would providecover for vessels equivalent to 400M GT.

“Standard Club and North now have the opportunity to create one of the world’s leading andmost influential P&I clubs, founded on exceptional service and innovation, a broader diversifiedproduct range, scale economies and global reach,“ said Jeremy Grose, CEO, Standard Club.

“The merged club would maintain an unwavering commitment both to member service and to theInternational Group system and offer marine insurance products, services and solutions relevantto the broadest range of shipowners worldwide”, said Grose. “Acting as a powerful voice forshipowners and their best interests, the merged club’s market-leading knowledge and deeptechnical insight would focus on supporting the changing needs of shipowners”.

“With stronger financial resilience, the newly created club would be well-positioned to thrive in allconditions”, commented James Tyrrell, Chairman at North. “In a changing and sometimes volatilemaritime sector, North’s Board has long recognised the potential value arising from consideredand balanced consolidation in P&I,” he said. “Choosing the right partner is the first critical steptowards success.”

The merger would help the new club navigate the continuing disruptive change affecting themaritime sector and better anticipate challenges ahead. Backed by a strong capital buffer overregulatory requirements, the combined club’s capital strength would allow for significantreinvestment in enriching member services, innovative technology and more tailored andsustainable solutions for the longer term.

The formal announcement follows the approval of the proposal by the boards of both clubs andnotification to principal regulatory authorities of their intention to merge. A joint North andStandard Club working group has been appointed to evaluate how a combined entity wouldmaximise value for members. The working group is following a structured methodology, allowingthe case for a merger to be objectively explored and assessed by both clubs.

“The ambition behind the merger is to deliver tangible benefits to shipowners. The boards of bothclubs have played a key role in guiding and shaping the proposal. Combining will provide greaterfinancial resilience, efficiency and an even deeper pool of talent to maintain and strengthen thefocus on service excellence and close member relationships for which both clubs are renowned”,said Cesare d’Amico, Standard Club’s Chairman.

The proposed merger remains subject to the approval of the full mutual membership of bothclubs and of all the appropriate regulatory authorities. Member voting procedures are anticipatedto conclude by the end of May. If approved by the membership, the formal merger of both clubsis expected to complete by 20th February 2023

“With a number of successful mergers in its recent history, North has a full understanding of therange of benefits available to members from a well-planned and well-executed union”, pointedout Paul Jennings, CEO at North.

“With histories which in 2022 add up to 300 years, the combination of these two uniqueadvocates of mutuality, with their complementary cultures, ambitions and approaches, wouldbuild on the strengths of each club,” he added. “The alliance of North and the Standard Clubwould deliver a compelling value proposition to take advantage of the opportunities and meet thechallenges of digitalisation, recruitment, regulation and sustainability”.

Newsletter 03-22
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