At the start of her term, Ursula von Der Leyen, the European Commission President, pledged to include the shipping sector in the European Union's climate policy, which we welcomed with open arms.
Von Der Leyen aimed to accomplish this by incorporating the sector into the EU emissions trading system. Within the bloc’s new low-carbon economy framework, as part of the European Green Deal, transportation emissions must decline by 90% by 2050. International shipping has an important role to play and will have to do its part to meet these goals.
In 2018, the shipment of goods to and from the EU emitted 142 million tonnes of carbon dioxide[1]. A recent study by Transport & Environment broke these emissions down by member state and showed that some countries’ shipping emissions were more than their entire national fleet of passenger vehicles. Shipping is the only sector in the EU without legislation in place requiring emissions reductions. On the contrary, it has ignored the sector’s adverse effects on the environment and climate, whilst developing measures meant to benefit its bottom line such as exemptions from VAT and favorable tonnage tax systems[2].
But the tide is now turning. The EU has started taking measures to monitor the emissions of ships sailing to and from European ports with the Monitoring, Reporting and Verification (MRV) regulation[3]. The MRV requires the majority of ships to report their CO2 emissions from journeys to and from the European Economic Area (EEA), as well as from the voyages between ports within the EEA. To try and catch up with the EU, the International Maritime Organization (IMO) decided to implement a similar, but less stringent and transparent scheme, the Data Collection System (DCS). However, the EU MRV is superior to the IMO’s DCS. Unlike the MRV, the DCS is not third party verified and it doesn’t require ships to report the cargo they carried, meaning the efficiency of the vessels cannot be ascertained. Besides that, the data collected under the DCS is not public, undermining transparency and governance of the entire system.
The EU Commission proposed some revisions to the EU MRV in order to harmonise both systems, which the European Parliament and Council are still discussing. The Parliament rapporteur in charge of the dossier, Jutta Paulus, is trying to take advantage of this revision to introduce measures that would actually reduce shipping emissions, rather than just monitor them. The proposals would incorporate shipping in the EU ETS with more stringent targets to decarbonise the sector and establish a fund specifically for shipping, which would reinvest money from the ETS into the industry. This week’s very encouraging vote represents a massive step in the right direction, with a clear signal which confirms the will of the EU to drastically reduce emissions from shipping, as Paulus’ proposal was supported by ENVI, the European Parliament Committee in charge of the dossier.
The EU aims to be carbon neutral by 2050. To achieve this ambitious goal, shipping must participate. The EU is well positioned to be a first mover and implement policies that will drive the decarbonisation of shipping. Unlike the IMO with 174 members, only 27 countries must agree to pass the EU regulation. The bloc can benefit from swifter and more ambitious regulation. The technology to decarbonize shipping is available. The largest obstacle to making this important change is the price, so we need a regulatory push to kickstart the process. The industry needs a clear signal to make the right decisions, and the EU is fully capable of providing that signal. If the new policies are well designed, they will be a blueprint for the IMO as it takes global action to address maritime emissions.
[1] EU THETIS MRV, 2019. Accessed May 2020. Accessible: https://mrv.emsa.europa.eu/#public/emission-report
[2] A tax applied to each ship’s cargo capacity, that overall enables ship owners and operators to pay less taxes than other corporate actors
[3] The specific parameters ships must report are “total annual CO2; total annual CO2 separately for outbound and inbound journeys; total annual CO2 emitted inside the EEA ports; average CO2 emissions per transport work, defined as gCO2/tonne-nautical mile (also known as the EEOI); average CO2 emissions per distance, defined as gCO2/nautical-mile.” T&E MRV report