CircularsNews
November 2022

International Group Clubs - 2023/24 P&I - FDD Renewals - Part 6 - Standard Clubs

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:

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20230605

https://climate.ec.europa.eu/eu-action/transport/reducing-emissions-shipping-sector_en

https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/what-eu-ets_en

Dear All,

For clarification and to prevent any miscommunication, please allow us to make that introductory statement about the 2 Standard Clubs.

Standard Club, as you know has two classes of P&I / FDD business acting as two different Clubs with their own free reserves. The oldest one called “Standard Club” is for larger tonnage, whereas the younger one for small tonnage is called “Standard Club Coastal and Inland Class” (previously called Standard London Class) is for smaller tonnage as its name suggests.  These are simply the trading market names for both of these Clubs and both Clubs officially operate under the following registered company names chosen according to the geographical location of its members.

“The Standard Club UK Ltd.” (in UK)

“The Standard Club Ireland DAC.” (In Ireland)

“The Standard Club Asia Ltd.” (In Singapore)

Their renewal circulars with detailed information are attached.

STANDARD CLUB (larger tonnage)

Club advises that a 10% general increase on all members’ P&I and FDD premiums is necessary with additional contributions for adverse records. While there will be no change to FDD deductibles, all P&I deductibles to increase by 10% subject to a minimum increase of USD 2,000 for crew and cargo claims.  Members preferring to maintain existing deductibles would be requested to pay additional premium adjustments.

Any adjustment in the group excess of loss reinsurance programme will be reflected to the member’s agreed premium for the new year.

STANDARD CLUB COASTAL AND INLAND CLASS (smaller tonnage)

Club advises no general increase for its mutual members but 10% increase in respect of fixed premium basis entered members.  For mutual members, any adjustment in the group excess of loss of reinsurance will be absorbed and not reflected to the premiums.

All deductible levels will be reviewed individually. Accounts with adverse records, or unacceptable risk profiles will be subject to individual negotiation.

Our comparison table is as follows:

2023 / 24

P&I

NOTES

American

+10%

No general increase but at least a 10% rise in premiums

Britannia

+10%

No general increase but at least a 10% rise in premiums

Gard

+5-7%

5% discount to apply after agreed renewal

Japan

   

London P&I

0

However global inflation and member loss records to be taken into account

North.O.E.

   

Shipowners

0

However +10% for yachts and certain increases for dry cargo vessels based on records.

Deductibles below $50,000 to increase by 10% and $500 minimum.

Skuld

+10%

No general increase but at least a 10% rise in premiums

Standard Club

+10%

Deductibles to increase by 10% and with minimum cargo and crew by $2,000

Standard Club Coastal and Inland Class

0 / +10%

Nil for mutual members and 10% increase for fixed premium basis entries.  Deductibles to be subject to review.

Steamship

+ 7.5 %

10% increase in deductibles below $50,000

Swedish

   

U.K.

+10%

No change to deductibles

West.O.E.

+10+

Deductibles to increase by 10% with a minimum increase of $2,500

     
     
     

2023 / 24

FDD

NOTES

American

+10%

No general increase but at least a 10% rise in premiums

Britannia

+10%

No general increase but at least a 10% rise in premiums

Gard

+5-7%

 

Japan

   

London P&I

0

However global inflation and member loss records to be taken into account

North.O.E.

   

Shipowners'

0

Please refer to explanations as to yachts and dry cargo vessels based on records.

Deductibles below $50,000 to increase by 10% and $500 minimum.

Skuld

+10%

No general increase but at least a 10% rise in premiums

Standard Club

+10%

No change to deductibles

Standard Club Coastal and Inland Class

0 / +10%

Nil for mutual members and 10% increase for fixed premium basis entries.  Deductibles to be subject to review.

Steamship

+7.5%

No change to deductibles.

Swedish

   

U.K Defence

   

West.O.E.

+15%

No change to deductibles.

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