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Nov 3, 2022
Lockton P.L. Ferrari

Renewal Bulletin No. 02/22 - Club Britannia

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:

3rd November 2022

P&I Mutual entries

  • Britannia is no longer adopting the General Increase system, however, the Clubis targeting an overall increase of 10% in the Estimated Total Call (“ETC”) for the2023/24 policy year before any Group Excess of Loss (“GXL”) rate adjustment.
  • The minimum deductible will be increased to the following levels:

- Crew: USD 7,000
- Cargo: USD 19,500
- All others: USD 13,500

At the recent Board meeting, the Club reviewed its financial position and considered itsrequirement for the 2023/2024 policy year:

  • Whilst there is no declared general increase with Members continuing to beunderwritten individually, the Club’s target is an increase of 10% in the ETC.
  • Members’ individual rates will be adjusted to reflect their claims record and riskprofile, as well as any changes in the cost of the International Group ReinsuranceProgramme.
  • The release calls percentages are set as follows:

- 2020/21: NIL
- 2021/22: 5%
- 2022/23: 7.5%
- 2023/24: 15%

  • Whilst no pool claims have been reported in the current policy year, pool claims in prior policy years have continued to deteriorate.
  • The Club remains financially strong with A rating by S&P but further rate increasesare required for the 2023/24 renewal to robustly address the underwriting deficit.

FDD Mutual entries

  • The 2022/23 rate increase was only the second increase since 2013/14.
  • An additional adjustment to premium rate for 2023/24 is required to address thecontinuing underwriting deficit.

The board decided the following:

  • Members’ rates will be adjusted to reflect their individual claims records and riskprofiles to achieve a 15% increase on Britannia’s ETC but there will be nodeclared general increase.
  • The Board set the following release call percentages:

- 2020/21: NIL
- 2021/22: 5%
- 2022/23: 10%
- 2023/24: 20%

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.

Renewal Bulletin No. 02/22 - Club Britannia
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