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Nov 9, 2023
Lockton P.L. Ferrari

Renewal Bulletin No. 03/23 - Club Gard

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:

8th November 2023


P&I mutual entries

  • 5% increase on Estimated Total  Call (ETC) for the 2024 renewal
  • 10% Owners’ general discount (OGD) will be applied on ETC basis for vessels renewed by Members with Gard for the 2024 policy year.

  • No changes in deductibles would be applied.

  • Release call for 2024/25 policy year set at 10%



  • No general changes but attention to record only.


The Board noted that the Gard group continues to be well capitalised and its financial rating remains strong with an A+ (stable outlook) rating by Standard and Poor’s - the highest in IG Group. The group has delivered a strong insurance performance over the last decade, and in spite of the inherent high volatility within the business lines the overall insurance result on a group level has been stable relative to its peers.


The Club renewal circular sets out the main highlights from the Clubs operating environment which were considered when deciding the general increase requirements:

  • With inflation still running high, the Board noted that there is a need to ensure that the Association maintains the Mutual P&I portfolio with only a small estimated loss. Premium adjustments will therefore have to be applied to maintain predictability and relative stability in the portfolio going forward.

  • Considering the strong capital situation in the Gard group of companies the Board agreed a 10% OGD on an ETC basis for vessels renewed by Members with Gard for the 2024 policy year.

  • 2024 will be the 15th year in a row that Gard returns capital to the mutual membership.

  • Premium adjustments will therefore have to be applied to maintain predictability and relative stability in the portfolio going forward and to this end, the Board of Directors has decided to levy a 5 per cent premium increase on ETC for the 2024 renewal.
  • Adjustments on the International Group’s reinsurance rates will be passed on to Members in     accordance with usual practice.

Renewal Bulletin No. 03/23 - Club Gard
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