28 March 2023
Freight News

The ‘Mother of All BAFs’ May Loom for Shippers as Green Targets Advance

Shippers are concerned that maritime discussions on decarbonization are shaping up to result in “the mother of all BAFs” for shippers, as carriers will seek to pass on the costs of using sustainable fuels.

The International Maritime Organization (IMO) is set to meet in July and is widely expected to increase its ambition of a 50% reduction in carbon emissions by 2050 to 100%, and will also discuss market-based measures, such as a carbon levy.

To achieve the new target, the maritime sector will need to invest heavily in the technology needed, with some of these processes already under way, with methanol testing, ammonia and LNG all a possibility.

Costs related to decarbonization are difficult to estimate, but Drewry Shipping Consultants director Philippe Damas, in a Linkedin discussion on the EU Emissions Trading System, said: “Drewry estimates that on the major Asia-North Europe route, these combined policy measures will increase bunker costs and emission-related taxes or allowances from $312 per 40ft container for very low-sulphur fuel oil today to $568, or about $458/40ft using methanol, a low-carbon fuel.”

Read more in an article from The Loadstar.

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