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Nov 14, 2023
Lockton P.L. Ferrari

Renewal Bulletin No. 06/23 - 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:

13th November 2023


P&I mutual entries


  • Whilst there is no declared general increase, 7.5% increase on the expiring P&I Estimated Total Call (ETC) for the 2024 renewal.


  • No changes to minimum deductibles.


FD&D entries


  • Whilst there is no declared general increase, 15% increase on the expiring FDD entries for the 2024 renewal.


The Board noted that the Britannia Group remains financially strong but rate increases are still required for the 2024/25 renewal to maintain the progress made so far in addressing the underwriting deficit.

This willprotect their underlying financial strength in the longer term. It will alsoevidence to the regulators and S&P that the Britannia Group is committed toachieving balanced underwriting.


The Clubrenewal circular sets out the main highlights from the Board’s decision on the renewal 2024/2025:


  • The Britannia Group had a strong 2023/24 renewal with owned tonnage increasing year on year. Whilst there was also continued improvement in the underwriting result from the previous year and progress has been made in addressing the underwriting deficit, work is not yet complete and more needs to be done to address the underwriting imbalance and support the Members with a capital distribution.


  • The Britannia Group’s Boards directed that there should be a further Capital Distribution of USD10 million, payable to Class 3 (P&I) Members with owned ships on risk as at midnight (BST) 24 October 2023. Each Member’s proportion of the distribution will reflect their share of owned net Class 3 premium in relation to the owned net Class 3 premium for all ships on risk at midnight BST 24 October 2023.


  • This position is set against continuing geopolitical tensions around the world, inflation remaining stubbornly high and volatility in investment markets.


  • The Club will undertake a technical based renewal of their membership to promote sustainable premiums and restore underwriting balance by achieving pricing adequacy.


  • Whilst there is no declared general increase, the Board has targeted an improvement in the premium adequacy equal to a 7.5% increase on the expiring P&I ETC.


  • The Board agreed that there will be no changes to minimum deductibles which will remain at the levels set for 2023/24. However, deductibles will be considered individually with reference to record and risk profile and as part of a suite of measures to achieve pricing adequacy on each Member’s entry.


The Boards set at 15% the Release Call 2024/25.

Renewal Bulletin No. 06/23 - Club Britannia
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