EMEA News
Novel Way of Carbon-pricing Agreed for Existing COA
A novel way of pricing carbon into an already existing contract of affreightment has been agreed by the parties involved.
KCC Chartering (part of ship operator Klaveness Combination Carriers) and mining and metals company South32 have a COA in place (agreed last year) to transport caustic soda to Australia.
But from 2023, KCCC will receive higher freight if actual carbon dioxide emissions are below an agreed baseline and lower freight if its ships under-perform relative to the baseline.
The extra money paid by South32 would then be used by the operator to improve its vessels' performance.
"The shipping industry needs a price on carbon emissions to incentivize efficiency improvements and to start the transition to new fuels," said KCC's chief executive Engebret Dahm.
"In the absence of effective regulations, we are grateful for the support of front-runners South32 in developing and introducing the first carbon pricing mechanism in the dry bulk and tanker industries."
South32 executive Holly Buschman said that the agreement with the ship operator was an important step towards the firm's goal of net zero Scope 3 greenhouse gas emissions by 2050.
A COA is a charter agreement that covers part of the freight carried on a vessel.
