Platts to include EU ETS carbon costs in tanker freight assessments; launches parallel carbon-exclusive rates for two benchmark routes effective Jan. 2, 2025

Platts, part of S&P Global Commodity Insights, has included the European Union's Emissions Trading System carbon costs in all its global clean and dirty tanker freight assessments that involve at least one EU port, to reflect prevailing tanker spot physical trade, with effect from Jan. 2, 2025.

Following Worldscale Association's notice on Sept. 6, and its earlier notice from July 8, Platts has also launched parallel calculated carbon-exclusive rates for two of its benchmark routes. This is in light of market feedback regarding open interest in respective Platts benchmark-settled derivative contracts.

As the freight market has demonstrated a broad adoption of carbon-inclusive trading, Platts has proceeded with the following:

Platts has amended the methodology of all its existing global clean and dirty tanker freight assessments that involve EU ports from carbon-exclusive to carbon-inclusive, reflecting spot fixtures, bids, and offers inclusive of EU ETS costs.

In addition, Platts has launched carbon-exclusive assessments under new symbol codes for the below-stated benchmark assessments, enabling prevailing open interest on the routes to be settled at a carbon-exclusive price.

The two carbon-exclusive assessments are calculated by deducting Platts Carbon Emission Charges, as per the phase-in schedule described in the Directive 2023/959 of the European Parliament and of the Council, from the spot carbon-inclusive freight on these routes:

• 70% of emissions reported in 2025 payable in 2026
• 100% of emissions reported in 2026 payable in 2027

Platts Carbon Emission Charges calculations employ baseline market norms for vessel speed and bunker fuel consumption, verified by extensive market surveys.

The calculations use the daily EU Emission Allowance Nearest-December price (EADLP00) as published by Platts.

The voyage carbon emissions are based on fuel consumption and are calculated using the carbon conversion factors published in Annex 1 of Regulation (EU) 2015/757 of the European Parliament and of the Council on the monitoring, reporting, and verification of carbon dioxide emissions from maritime transport. These carbon conversion factors, published by Platts since Aug. 1, 2022, are:

Regarding the carbon-inclusive Dirty Tanker Aframax Freight 70,000 mt USGC-UKC $/mt , Platts emphasizes that one of the three routes, the Nederland-Fawley route, is outside the European Union and therefore does not include any EU ETS costs. The Carbon Exclusive Dirty Tanker Freight Aframax 70,000 mt USGC-UKC $/mt (CETDG00) is calculated by subtracting the Carbon Emission Charge Aframax 70,000 mt USGC-UKC $/MT (TDCEE00), adjusted for the phase-in schedule of the relevant regulations, from the carbon-inclusive Dirty USGC-UK Continent Aframax 70,000 mt $/mt (TDUCF00). The average basket flat rate and the basket route will be identical between the assessments.

This launch follows a decision note published on Oct. 4, which can be found here, and an updated decision note on Oct. 29, which can be found here.

Those decision notes followed a consultation published on Aug. 1, which can be found here, after the Worldscale Association's initial July 8 notice that it will include EU ETS carbon costs in its flat rates for 2025.

Discontinuation of existing carbon-accounted assessments

As a result of the transition to carbon-inclusive freight, carbon-accounted tanker freight assessments launched July 1, for all routes involving EU ports have become redundant. Platts has discontinued these assessments effective Jan. 2, 2025, to avoid duplication.

Impact on Platts Dated Brent

The 10-day rolling average of the Aframax 80,000 mt UKC-UKC assessment (TDUUW00) is used in the calculation of the six Freight Adjustment Factors that are used in Platts Dated Brent to netback CIF Rotterdam indications to FOB North Sea equivalent values.

The spot assessment PFAKD10 is also referenced in section 6.3 of the Stasco BFOETM 2022v1.2 General Terms and Conditions.

As described above, these assessments are carbon-inclusive from Jan. 2, 2025, based on this launch.

Please send all feedback and comments to tankers@spglobal.com, pricegroup@spglobal.com, Europe_products@spglobal.com, and Europe_crude@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.