EEX launches dry freight index showing cost of carbon

FILE PHOTO: German Chancellor Merkel arrives to visit the European energy stock exchange EEX in Leipzig
FILE PHOTO: German Chancellor Angela Merkel arrives to visit the European energy stock exchange EEX in Leipzig August 19, 2010. Merkel is on tour to promote sustainable energy project in Germany. REUTERS/Fabrizio Bensch/File Photo

July 12, 2021

FRANKFURT (Reuters) – German energy exchange EEX on Monday launched a zero carbon freight index (ZCFI) which combines the bourse’s dry freight and emission permits prices to show operators how accounting for carbon emissions could affect freights.

Decarbonisation 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.

The ZCFI comes as the European Union is due to unveil climate legislation this week which is likely to include the extension of the EU emissions trading system (ETS) to the maritime sector.

As a consequence, the shipping industry would have to factor in carbon costs 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,” EEX, which is part of Deutsche Boerse, said in a statement.

Participants would be able to make more informed trading decisions on this basis, which would help them navigate more easily through the decarbonisation process, it said.

The index uses the EEX Dry Freight forward freight agreement (FFA) market’s daily timecharter prices for capesize and panamax vessels and adjusts them for the cost of carbon by drawing on EEX EU carbon allowances futures (EUAs).

The EEX Zero Carbon Freight Index is available via www.eex.com, www.eexasia.com, the Cleartech Portal, and the EEX Group Daily Freight Market Update Report.

(Reporting by Vera Eckert, editing by Emelia Sithole-Matarise)