As the European Commission prepares to revise its climate targets, shipping finds itself facing its first carbon tax compliance deadline
The Commission has published a proposal for a stronger greenhouse gas (GHG) emissions reduction target of 90% by 2040, with language bringing it into sync with International Maritime Organization (IMO) targets for the maritime industries.
European Community Shipowners’ Associations (ECSA) said it supports the EU Commission’s consideration of separate targets for shipping that would mirror the revised IMO GHG strategy.
The new targets in IMO’s GHG strategy, which were agreed in July 2023, set out an end goal of net-zero emissions from the industry by 2050, with multiple intermediate targets, among them reaching at least 70%, but striving for 80% emissions reduction from the sector by 2040.
“After the historic agreement of last July, this is a strong message of support to IMO to develop the measures necessary to reach net-zero GHG emissions from international shipping by 2050. It’s also an important step forward to ensure European shipping operates on a level playing field,” ECSA secretary general Sotiris Raptis said.
ECSA said it also welcomed a commitment by the Commission to address “barriers to the deployment of low- and zero-emissions fuels including e-fuels and advanced biofuels” in shipping and to give the sector “priority access to these fuels over sectors that have access to other decarbonisation solutions”.
According to ECSA, the EU Commission acknowledged that lowering the cost of sustainable fuels is key for the competitiveness of shipping and is committed to considering regulatory measures to encourage the production of low- and zero-carbon fuels.
"European shipowners support the introduction of requirements for the fuel suppliers to make these fuels available in the market," the ECSA said.
"It’s the first time we see such a strong commitment to give shipping priority access to low- and zero-emissions fuels such as advanced biofuels and e-fuels. The price gap is immense, as the cost of sustainable fuels can be four times higher compared with fuels currently used in shipping," Mr Raptis said.
The ECSA said it looks forward to working with the EU Commission to "translate this commitment into immediate action," and to leverage shipping’s earmarked EU Emissions Trading Scheme (ETS) revenues set out under the current Innovation Fund.
The EU Commission has also published its list of administering authorities for the EU ETS carbon tax scheme. The publication of the list of authorities comes with a 40-day deadline for shipping companies to choose an EU country in which to open an ETS tax compliance account. These so-called "maritime operator holding accounts" (MOHAs) are held in the European Union registry, which is equivalent to an online banking system that ensures strict accounting of emissions allowances (EUAs), records annual greenhouse gas emissions and enables the transfer of EUAs. MOHAs allow shipping companies to trade and surrender their EUAs in compliance with the ETS Directive.
The EU’s rules bringing the shipping sector into its carbon tax scheme orbit came into force in June 2023 and mandated that all EU member states transpose the relevant EU legislation into national legislation by December 2023.
According to law firm Watson Farley & Williams (WFW), only one EU member state has completed the task, "but the obligations on the maritime sector continue, nonetheless," and companies failing to register properly will be subject to enforcement actions.
"The type of entity able to register as a shipping company has shifted repeatedly throughout the legislative process and has not been clarified by the publication of the List. Those on the List should check that the right entity within their group has been identified by the European Commission and in the right jurisdiction for registration. It may also be worth cross-checking the IMO number or, indeed, the lack of it. Companies that are not on the List but expected to be on it are not necessarily free of obligations under the ETS, nor are they barred from entering EU waters." WFW said.
Click here to read the latest Marine Propulsion News and sign up for the FREE Marine Propulsion e-newsletter for exclusive content, offers and the latest event news.
Riviera Maritime Media’s Maritime Decarbonisation Conference, Asia 2024 will be held in Singapore, 3-4 April 2024, click here for more information on this industry-leading event
© 2023 Riviera Maritime Media Ltd.