Industry announcement:
The European Parliament’s lead MEP on the EU ETS proposes amendments to the ETS for maritime that put the impact and efficiency of the EU Green Deal at risk, says World Shipping Council (WSC).
The EU ETS intends to impose a technologically neutral greenhouse gas (GHG) price across all elements of industries like shipping, to incentivize the most cost-effective GHG emissions reductions and innovative solutions. Carbon pricing is a key part of driving adoption of zero-GHG fuels, and the EU ETS can be an important step toward global market-based-measures that would apply to all ships, not only to a fraction of international fleets.
WSC has two primary concerns:
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The proposed changed definition of “responsible entity” would corrupt the ETS: The proposed amendments[1] are intended to shield shipowners from ETS costs and then provide them with front-of-line access to ETS revenues such as the Ocean Fund. This would corrupt the whole idea of the ETS, changing it from a “polluter-pays” policy to a system where the “polluter-gets-paid”, and vastly reduce its effectiveness. A market incentive for technological change that cannot be applied to shipowners who control the pace of shipboard technology innovation will fail to achieve EU Green Deal goals, slowing down the pace of transition.
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The bilateral agreements proposed would undermine progress towards global GHG policy: Other amendments[2] direct the European Commission to abandon its principle of multilateralism and engage in bilateral deals with nations to extend carbon pricing only for routes serving Europe. This would be a costly distraction, undermining progress towards global GHG policy at the IMO and slowing progress toward decarbonising shipping. It would also undermine the GHG and economic goals of the EU Green Deal, amplifying the risks identified in EU impact assessments – GHG leakage, loss of EU port competitiveness, and distortion of trade.
Shipowners and operators share responsibility for decarbonisation
“Ship greenhouse gas emissions result from the combination of design technology, fuel consumed, and operational practices. It’s obvious, frankly, that one cannot decarbonise shipping without addressing the ship itself. A regional EU ETS carbon price must apply to all parties who have a role in GHG reductions– shipowners and operators,” says John Butler, President & CEO of WSC.
Bilateral agreements put global progress at risk
Amendments directing the Commission to pursue bilateral agreements to extend GHG pricing further beyond the European Economic Area (EEA) can only slow progress toward global market-based-measures. Any resulting agreements would also be ineffective as the bilateral extension of regional EU ETS could at best extend it to address about 20% of global emissions.[3] Gaining nothing globally, these amendments would also amplify regional EU risks of GHG leakage, voyage evasion and diversion of seaborne trade, and competitive losses across EU ports and supply chains.[4]
“WSC members are owners, operators, and charterers of ships and are committed to decarbonising shipping. We understand the shared responsibility for GHG reductions in the maritime sector, and we don’t underestimate the challenge. Decarbonising shipping is an “all hands” and global effort, and regional policy must lead rather than impede,” concludes John Butler.
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[1] See Peter Liese report, Amendments 9, 10, 18, 29, 44, 45 in particular. The rapporteur proposes the inclusion of ‘time charterers’ within the definition of the responsible entity under the regulation and to require a legally binding clause in charter contracts that mandates the pass through of EU ET costs from the owner to the charterer.
[2] See Peter Liese report, Amendments 7, 8, 46, 47 in particular. This directs the European Commission to engage in bilateral agreements with nations to extend carbon pricing to remainder of voyages starting between EU and non-EU ports which are not covered under the Commission’s proposal.
[3] “In 2018, ships calling at EU and European Economic Area ports emitted around 140 million tonnes of CO2. This represents 18 % of the global CO2 emissions from international shipping (STEAM).” European Maritime Transport Environmental Report, EEA and EMSA, 2021.
[4] CE Delft & DLR, Research for TRAN Committee – Maritime shipping, aviation and the EU ETS: challenges and impacts, Final report, European Parliament, Policy Department for Structural and Cohesion Policies, Brussels, 2021.
