Shipping’s inclusion in the EU’s emissions trading system (ETS) and a new FuelEU Maritime initiative are part of a set of proposals related to the European Commission’s Green Deal
If passed by the EU’s 27 member countries, the European Commission proposals would see shipping gradually phased in to participation in the ETS over three years, starting in 2023 with a 20% emissions payment liability that would grow to 45% in 2024, 70% in 2025 and 100% in 2026.
"We know that carbon pricing works. Our existing Emissions Trading System has already helped significantly to reduce emissions in industry and in power generation. So we will strengthen the existing system in these sectors. And we will make the Emissions Trading System applicable to aviation and extend it to the maritime [sector],” European Commission President Ursula von der Leyen said during a press conference on the proposals.
Under the proposed terms of shipping’s inclusion in the ETS, shipowners would be required to pay for air pollution caused by their vessels by buying permits. Non-compliant vessels would be banned from EU ports.
Ultimately, all vessels of more than 5,000 gt sailing within the EU would be required to comply with the carbon tax proposal, as would half of the voyages by vessels weighing 5,000 gt arriving from or departing to ports outside of the EU.
The inclusion of shipping in the bloc’s carbon market is one of a dozen proposals that make up the European Commission’s ’Fit for 55’ measures, which are aimed at reducing net greenhouse gas (GHG) emissions on the continent by 55% from 1990 levels by 2030. The measures are expected to face prolonged debate and years of potential negotiations within the EU parliament.
Another of the proposals involving the maritime sector, FuelEU Maritime, is aimed at reducing the carbon intensity of the energy sources used by ships while in port in the EU and encouraging uptake of lower carbon intensity fuels and energy grids for power. The proposed legislation would set maximum limits for carbon intensity, increasing in scale in five-year increments from 2025-2050.
"The fossil fuel economy has reached its limits. We want to leave the next generation a healthy planet as well as good jobs and growth that does not hurt our nature," President von der Leyen said in an EU statement.
The EU’s unilateral move to attempt to impose regional restrictions on a global market has faced criticism from various industry organisations for going too far and from environmental groups for not going far enough to tackle climate change.
The International Chamber of Shipping (ICS) lambasted the proposed EU measures.
ICS secretary general Guy Platten said the rules would "greatly upset the EU’s trading partners" and "could seriously put back climate negotiations".
“We know that non-EU States... have already expressed concern over this diplomatic overreach and imposition of a unilateral and extra-territorial tax on trade. It cannot be equitable for non-EU shipping companies to be forced to pay billions of euros to support EU economic recovery plans, particularly under a scheme that undermines CO2 negotiations,” Mr Platten said.
Greenpeace’s EU director Jorgo Riss criticised the plan for not setting more ambitious GHG reduction targets.
"This whole package is based on a target that is too low, doesn’t stand up to science, and won’t stop the destruction of our planet’s life-support systems. For all the hype, many policies won’t kick in for 10 years or more," Mr Riss said.
UK Chamber of Shipping chief executive Bob Sanguinetti echoed many from the shipping industry by pointing to ongoing efforts within shipping’s global regulatory body to curb emissions from the sector as “the best way to create real, lasting change”.
“We have seen how regional measures can distort the market and we encourage our EU partners to work collaboratively with the industry taking these proposals to IMO to accelerate the decarbonisation journey,” Mr Sanguinetti said. “The Chamber would prefer not to have different regulations in different jurisdictions.”
For its part, the UK Government, which has recently exited the European bloc, announced its intent to decarbonise the transport sector on the same day as the EU’s raft of climate proposals were released.
In a written statement to the UK parliament, Transport Secretary Grant Shapps said the plan "sets out further commitments for our maritime sector, establishing our ‘course to zero’, consulting on how we get more ships plugging in to our decarbonised grid, exploring how we phase out emissions from vessels, and considering how we take advantage of the UK’s strengths in the maritime sector to support growth in green technology and shipbuilding".
Trade lobby Maritime UK criticised the government for "overlooking" maritime in its plan.
“No headline commitments and no money to get on with the task in front of us," Maritime UK chief executive Ben Murray said.
“The [Transport Development Plan] rightly recognises power points need be installed around the coast, but there is no reason to delay installing them. We know how other countries have got there and that is through co-investment by industry and government... If we are to level up our coastal communities and bring shipbuilding home, we need government to do what other maritime nations do, and invest in research and innovation on a scale similar to UK automotive and aviation," Mr Murray said.
Maritime UK called for a spending review in the coming months to provide investment.
“The maritime sector is ready to work intensively with government to kick-start the decarbonisation of the sector and realise the ambitions of the Transport Decarbonisation Plan,” Mr Murray said.
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