Earlier this month, the EU Parliament’s Rapporteur, MEP Peter Liese, published his draft report on a proposal to revise the Emissions Trading System (ETS) Directive which forms part of the ‘Fit for 55’ package of climate and energy reforms unveiled in July 2021.
The draft report includes a number of ambitious amendments to emissions trading for the maritime sector – the Maritime ETS.
“The latest set of amendments to EU Maritime ETS proposal will, if agreed, put more pressure on the maritime industry to switch to cleaner fuels sooner than originally planned,” Watson Farley & Williams said.
Further amendments are expected to be submitted in response to ongoing feedback from businesses in the coming weeks.
Key amendments
Although the underlining principle of the Maritime ETS proposal is consistent with the ‘polluter pays’ principle, there are a number of significant changes to the definitions, scope, phase-in periods and thresholds which are being proposed in the draft report:
The draft report is the first step in a long process before the European Parliament adopts its position for the negotiations with the Council. The draft report is due to be considered on 10 February 2022 and further amendments are due to be submitted on 16 February 2022. A vote on the final amendments is likely to occur around June 2022.
World Shipping Council: The EU Parliament proposed amendments to EU ETS put Green Deal goals at risk
The proposed amendments to the ETS for maritime put the impact and efficiency of the EU Green Deal at risk, according to 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.
As explained, WSC has two primary concerns:
“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,” John Butler , President & CEO of WSC, commented.
Amendments directing the European 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, WSC believes.
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. 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, WSC added.
“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,” Butler concluded.