European Parliament's latest revision of the ETS texts offers shipping a chance to pass the costs of being in an ETS to charterers and those more responsible for fuel decisions
Shipping has not yet learned to speak in one voice. The latest announcements from the European Parliament has exposed deep differences on who pays for shipping’s decarbonisation as European Shipowners, including the Greek shipowners have come out in favour of the changes, while the major container lines have opposed it.
The differences in how shipping should pay for cleaning up its emissions comes barely two months after COP 26 and a general feeling that the industry had managed to sound more in charge of its future than it ever had been.
What the shipowners have said
The back ground to this rift in opinion are plans for Europe to draw shipping into its emission trading scheme and then use the revenues it generates from high polluting vessels to create a specialised fund. The changes to the ETS have been a long time coming and widely seen as either the stepping stone to a global system, or the premise of a regional patchwork of market based measures should the member states and various lobby groups that send delegates to the IMO’s marine Environment protection committee continue to procrastinate about their intentions for international shipping.
The European Union does not have to work to the rules of the IMO (a UN agency) and can set more direct regulation, which it is doing, notably under its Green Deal policy drive. The revision of its Emission Trading Scheme, while delayed, is set to see emissions from ships fall into it.
The latest proposal from the parliament on the ETS revision suggests: “The shipping company is not always responsible for purchasing the fuel or taking operational decisions that affect the CO2 emissions of the ship. Those responsibilities can be assumed by an entity other than the shipping company under a contractual arrangement.
In that case, in order to ensure that the polluter pays principle is fully respected and to encourage the uptake of efficiency measures and cleaner fuels, a binding clause should be included in such arrangements for the purpose of passing on the costs so that the entity that is ultimately responsible for the decisions affecting the CO2 emissions of the ship is held accountable for covering the compliance costs paid by the shipping company under this Directive.”
This entity would normally be the entity that is responsible for the choice and purchasing of the fuel used by the ship, or for the operation of the ship, as regards, for example, the choice of the cargo carried by, or the route and speed of, the ship”
This, for many shipowners may be good news as it gives them a legal text to get charterers and cargo owners to pay for CO2 allowances and monies needed to be paid. For container lines on international trade, somewhat more problematic. However it has to be remembered that shipping companies have been passing on fuel price hikes through bunker adjustment charges for many years and the industry has been able to pass on costs to forwarders and cargo owners fairly quickly.
