EU Emissions Trading System (ETS)
Understanding Carbon Charges for Logistics
What is the EU ETS?
The EU Emissions Trading System (EU ETS) is the world's first and largest carbon market. It works on the 'cap and trade' principle. A cap is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. The cap is reduced over time so that total emissions fall.
From 2024, the EU ETS has been extended to include CO₂ emissions from all large ships (of 5000 gross tonnage and above) entering EU ports, regardless of the flag they fly. This has a direct financial impact on logistics and transportation costs.
How Carbon Tax is Calculated
The formula is straightforward but depends on accurate data.
Total Carbon Tax = (Total CO₂e Emissions in tonnes) × (Price per EU Allowance)
1. Calculating CO₂e Emissions
Emissions are calculated based on the fuel consumption for a given journey and the emission factor of that fuel. Different transport modes have vastly different emission factors.
Fuel Consumed (in tonnes) × Emission Factor (tCO₂e / tFuel) = Total CO₂e (in tonnes)
2. Price per EU Allowance (EUA)
An "allowance" is a permit to emit one tonne of CO₂ equivalent (CO₂e). The price of these allowances fluctuates daily based on market supply and demand. For our simulation, we use a reference price.
Current Reference Price: ~€95 per EUA
Emission Factors & Cost by Transport Mode
Why mode shifting is so effective for reducing carbon tax.
| Transport Mode | Typical CO₂e (g/tonne-km) | Illustrative Cost per 1000km (1 tonne) |
|---|---|---|
| Road (Diesel Truck) | 60-150 | €5.70 - €14.25 |
| Rail (Electrified) | 10-30 | €0.95 - €2.85 |
| Short-Sea Shipping | 15-40 | €1.43 - €3.80 |
| Road (Electric Truck) | 20-50 (grid dependent) | €1.90 - €4.75 |
*Values are illustrative. Actual emissions depend on factors like vehicle age, load factor, and electricity source for rail/EVs. Costs are based on a reference price of €95 per EU Allowance (EUA).