The European Energy Exchange has today launched its new Zero Carbon Freight Index (ZCFI). The index enables players in the Dry Freight market to see, for the first time, how the cost of carbon emissions could affect freight prices.
The ZCFI comes as the EU prepares to unveil legislation this week, which is likely to include the extension of the EU ETS to the maritime sector. Once these rules are in place, ship owners and operators will be required to take part in the EU Emissions Trading Scheme (ETS). As a consequence, the shipping industry will now have to factor in the cost of carbon when conducting voyages that call at EU ports. By referencing the ZCFI, market participants will have a new reference point, which they can use to calculate the cost of their carbon exposure, thereby giving a clearer, more indicative picture of their overall transportation cost.
The new EEX Zero Carbon Freight Index calculates the synthetic price of daily FFA timecharter rates for both Capesize and Panamax vessels, which are adjusted for the cost of carbon. Price information is taken from the highly liquid EEX Dry Freight FFA market which is then combined with EEX EUA Futures to create a daily “Zero Carbon FFA” rate which reflects a 100% carbon reduction.
Decarbonization of the shipping value chain is already well underway and will continue to be front and centre for ship owners, charterers and financiers in the decade ahead. As one of the world’s leading exchanges in freight and emissions trading, EEX has been championing the move to decarbonized shipping for some time and will continue to proactively shape and support the industry’s journey as it transitions to a more sustainable future.
Steffen Koehler, EEX - Chief Operating Officer comments: “As a major player in both the freight and carbon markets, EEX has a duty of care and a responsibility to help our customers navigate through the decarbonization process and ensure that they manage their exposure effectively. Through our new Zero Carbon Freight Index, we are actively helping our customers and the wider shipping industry in real terms, by providing credible, reliable data which in turn, helps players make better and more informed trading decisions today and in the future”.
The EEX Zero Carbon Freight Index is available from today (12 July 2021) via eex.com and the EEX Daily Freight Market Update Report.
The European Energy Exchange (EEX) is the leading energy exchange in Europe which develops, operates and connects secure, liquid and transparent markets for energy and related products. As part of EEX Group, a group of companies serving international commodity markets, EEX offers contracts on Power, Natural Gas and Emission Allowances as well as Freight and Agricultural Products. EEX also provides registry services as well as auctions for Guarantees of Origin, on behalf of the French State: www.eex.com
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