Editorial of Ship&Offshore 6/2020: All inclusive

The European Parliament has voted in favour of including carbon emissions from shipping in the EU Emissions Trading Scheme (ETS). Provided that the decision is adopted, it would require owners of ocean-going vessels of 5,000gt and above, calling at European ports, to offset greenhouse gas emissions by acquiring permits from 2022 onwards. Until now, shipping has been excluded from the European Union’s climate targets, so maritime transport is the only sector where the EU has no specific commitments to reduce greenhouse gas emissions.

While the decision is welcomed by some, it does not go far enough for others. Critical voices come primarily from the owners‘ side, especially with regard to additional costs. Ralf Nagel, president of the German Shipowner’s Association (VDR), fears that companies would have to divert money that they would otherwise have spent on investment in more modern, even more efficient and therefore climate-friendly ships.

In general, three points should not be overlooked in the discussion in order to evaluate the overall setting.

In some instances, shipowners may be able to pass on additional costs to their customers on a 1:1 basis and would therefore not have to absorb the higher costs on their own. For individual shippers with cargoes booked on a large container ship, for example, the extra cost would be negligible.

The money that would be raised through emissions trading would be mainly invested in a special Ocean Fund for the period from 2022 to 2030, members of the European Parliament stated. It would be used to make ships more energy efficient and to support investment in innovative technologies and infrastructure, such as alternative fuels and green ports. Twenty percent of the fund’s revenue should be used to protect, restore and efficiently manage marine ecosystems affected by global warming.

On the other hand, the European Parliament’s initiative only applies to European ports. In an industry that operates globally like no other, the EU’s regulation needs to set out very clearly what portion of a voyage is subject to the ETS if a vessel trades between, say, Singapore and Rotterdam and not only in European waters.

Furthermore, a purely European approach may encourage a patchwork of other regional arrangements, which stand in the way of a global climate policy.

It remains debatable at this point to what extent there will be an impact on international trade. Not calling at European ports, however, cannot be an option for any operator.

There is certainly no doubt that shipping should become a climate-neutral mode of transport as soon as possible, and the IMO is driving forward initiatives in this direction. As a UN agency that works on consensus between its member nations, however, progress is not as fast as some would like. Its critics argue for more urgency: without new, climate-neutral fuels, there will be no CO₂-free world. In order to successfully develop and establish these fuels including, for example, power-to-X or e-fuels and biofuels, enormous investments will be required.

A new ETS scheme and with it the envisaged Ocean Fund is of course no panacea but could consequently only be understood as an indirect means of achieving climate targets, in order to provide the necessary money for relevant R&D activities.