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The EU pushes the shipping industry a step further into the green transition

19.05.22

On Tuesday the EU voted on an ETS to further the path toward a more sustainable
future shipping industry.

The shipping industry is fostering its path to be covered by the EU’s carbon market
(ETS), especially after European Parliament’s environment committee (ENVI) voted
to enforce the emissions reduction schemes. This path started back in July, when
the ETS reform was inserted in a massive legislative package thought to align with
stricter emission reduction pledges to be reached by 2030.

On Tuesday this pathway toward a greener shipping industry moved even further,
with the MEPs endorsing changes in the carbon market, such as the expansion of
the plan to cover the totality of voyages by 2028, as well as establishing the
charterer-pays clause, and the creation of a fund dedicated to the energy transition
of the sector.

The legislators voted to launch a second ETS to set CO2 costs on fuel suppliers.
This scheme should be applied to commercial voyages starting from 2025, and be
extended to private consumers in 2029. According to these projections, the sectors
covered by the main EU ETS package will likely see a cut of emissions of up to 67%
by 2030. As far as shipping is concerned, the endorsement means proposed by the
ENVI to the original plan will regulate all the emissions of voyages departing or
arriving in the European ports, therefore relinquishing the previously 2023-2026
phase-in period.

Transport & Environment, the European clean transport campaigner, despite having
welcomed the ending of shipping’s right to free polluting, warned agains the various
exemptions that risk to undermine the positive outcomes of these efforts. The
ECSA, on the other end, also welcomed this “polluter-pays” shift made by
lawmakers, as well as the proposal to create the so-called Ocean Fund, with the
intent to attribute 75% of shipping allowances revenues’ to the energy transition
processes. The WSC, on the contrary, underlined how European politicians need to
make sure that the ETS carbon price becomes not only another simple form of
taxation, but rather an incentive towards a sustainable shift, while not threatening
the GHG cut emissions processes already in action. The liner lobby group also shed
light on three main points. Firstly, the design of the EU ETS will need to take into
consideration the life-cycle emissions to incentivise first mover actions. Secondly, it
must avoid thinking that a broader geographical equals higher ambitions. Last not
least, all parties could be granted influence over the design and operation of ships.