Europe to regulate emissions trading for shipping

Europe to regulate emissions trading for shipping

The European Commission will shortly introduce emissions trading for shipping in what could be the industry’s next greatest shift after the sulphur cap starts in four weeks’ time.

The president of the European Commission, Ursula von der Leyen, in one of her first major speeches, promised on Monday at the UN climate conference (COP25) in Madrid to make Europe the first climate neutral continent by 2050 by introducing the so-called European Green Deal.

In March next year, the commission will propose the first-ever European Climate Law to make the transition to climate neutrality irreversible.

This will include extending emission trading to all relevant sectors including shipping.

“The European Green Deal will open new opportunities in all sectors – from transport to taxation, from food to farming, from industry to infrastructure,” von der Leyen said.

The International Monetary Fund (IMF) recently estimated that a shipping carbon tax of $75 per tonne of CO2 in 2030, and $150 in 2040 would reduce shipping CO2 emissions by nearly 15% in 2030 and 25% in 2040. The IMF has predicted this new tax would raise revenues of about $75bn in 2030 and $150bn in 2040 while increasing shipping costs by just 0.075% of global gross domestic product in 2030.

Commenting on the potentially historic news, Faig Abbasov, programme manager for shipping at the NGO Transport & Environment, told Splash today: “If it were a country, shipping would be the eighth biggest emitter in Europe. Yet it has been hiding under the radar, free riding on the climate efforts of other sectors. This is no longer acceptable, every sector must contribute its fair share. EU leaders must now rise up to the new commission and parliament’s ambition and ensure that European shipping pays for its carbon pollution under the EU emissions trading scheme (ETS).”

Applauding the news from Sweden, Hannes von Knorring, a maritime energy expert from the University of Gothenburg, said the decision from Brussels could serve as a bonanza for forward thinking companies.

“This should provide exciting opportunities. Innovative GHG reduction projects from sectors in the ETS can apply for funding from the €10bn EU Innovation Fund,” von Knorring said.

Last Friday at a conference in the heart of the European political quarter representatives from the entire European waterborne sector – shipowners, cargo owners, shipbuilders, technology providers, port operators, freight forwarders, inland waterways, hinterland logistics, IT providers, and more – gathered to discuss how collaboration would create better chances of meeting climate challenges.

Because shipping touches so many policy areas several European Commission directors spoke at the Waterborne Transport Platform event. It was abundantly clear that the new president, von der Leyen, was determined to take responsibility for tackling the climate emergency. The Green Deal is the centrepiece for action.

A key message from the event was that to achieve the rapid emission reduction shipping will need new ways of thinking. Delegates were reminded how the power sector achieved the transition to affordable ‘green’ power because it was given financial support to get over the innovation hump. The conference participants were urged to focus on the ‘deal’ aspect of the Green Deal, to consider what would be needed to accelerate research and implementation, and that by uniting in a single sector accessing support for the necessary energy transition would be more straightforward.

“It’s all too easy for us all to slip in to our usual combative positions but in this climate emergency we need to be open to finding new ways forward,” commented Di Gilpin from the Smart Green Shipping Alliance.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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3 Comments

  1. Avatar
    Hannes von Knorring
    December 3, 2019 at 3:17 pm

    As for the part about “opening up opportunities” – the EU is able to use funding from sales of permits for the €10 billion Innovation Fund, which is opening up for calls later next year (the permits are only €25 per ton, well below the ITF revenue calculations). We’ve started working on proposals for land-based clients – if the fund works as intended it will make some great projects happen. It also counts added OPEX due to the innovation as relevant costs, not only CAPEX. Including shipping in this scheme I hope will also make shipping companies eligible for this funding, well ahead of an international fund discussed in the IMO.

  2. Avatar
    PeterB
    December 3, 2019 at 5:46 pm

    There is a folk wisdom:
    Don’t sell the fur before shooting the bear.
    So, now the EU is sending out the hunters with green feathers stuck in their hat and pockets full of somebody else’s money to find the bears.
    What to do, if shooting the last 3 bears seems not be enough?
    And what to do, if there are no bears left?

  3. Avatar
    Peter Nuttall
    December 4, 2019 at 3:01 am

    This great news. While it has to be agreed that a global solution is needed, the IMO has consistently shown that as a technical agency it lacks the orgnatsitional design and capacity to deliver global emissions necessary at the speed and scale needed or that its processes can provide the unity and urgency required of its membership. And great that Europe can provide the financial instruments to catalyse change.

    Just as long as Europe also recognises that it’s economies and peoples have profited well from fossil fuel shipping (and industry) historically and contuse to do so today. With US, Australia, et al refusing to display responsible leadership, Europe has an absolute responsibility to take the weakest, the most vulnerable and remote with it – the Pacific has not created this global crisis and will suffer first and worst. We need better, greener, more affordable lifeboats for our survival now. we know what is needed – and it will require a substance financial immediate investment now. €10m Eu/IMO ‘pilot projects’ – with only 1/2 the money actually going to the areas of need – simply doesn’t cut it. -Real investment in real solutions for those who will actually bear the greatest burden must be delivered now. RMI president has just asked you all to avoid ecocide. We dont need more ‘fuzzy’ GloMEEPs or NAP template projects that parachute in overpaid UN officers and consultants on business class flights to run more workshops – these are simply conscience salves for rich nations. We are watching with interest the support for the ZEV2030 – an initiative to deliver efficient shipping to the first world and large economies – but that will actually leave us further behind and increasingly disadvantaged. Yes – a carbon tax is needed now. And yes, the majority of the revenue that is raised needs to be for SIDS/LDC adaptation and climate resilience – the concept that all this funding will be plowed back into the large scale industry to pay for its own R&D needs to be knocked on the head here and now.