International Shipping gets closer to the rocks of the EU Emissions Trading System

Earlier this year this blog reported on the implications for international shipping of the EU ‘Green Deal’, the topic of two papers at the IISTL’s recent Colloquium.

Things are now moving on apace. On 16 September the European Parliament voted in favour of a 40% reduction in CO2 by 2030 for all maritime transport and for the inclusion of ships of 5000 grt and over in the EU Emissions Trading System (ETS), with the establishment of an “Ocean Fund” to run from 2022 -2030 to contribute to protecting marine ecosystems. The Parliament is now ready to start negotiations with member states on the final shape of the legislation.

Where the EU goes, the IMO may follow – on which note in another interesting development, on 25 September, the major charterer, Trafigura, have submitted a proposal to the IMO for a partial “feebate” system to decarbonise global shipping. Trafigura’s press release states, “We propose a self-financing system where a levy is charged on the use of fuels with a CO2-equivalent intensity above an agreed benchmark level, and a subsidy is provided for fuels with a CO2-equivalent profile below that level. It is now time to put a price on carbon emissions in the shipping industry Our own in-depth analysis and commissioned independent research indicates that the levy should be between $250-$300 per tonne of CO2-equivalent. While primarily bridging the cost gap between carbon intensive and low or zero carbon fuels, this partial “feebate” would also raise billions of dollars for research into alternative fuels and could help assist small island developing states and other developing countries mitigate the impact of climate change.”

Rather more than the $2 per tonne bunker levy for financing R&D into alternative green fuels that various shipowner organisations proposed earlier this year.

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