European Commission indents to include shipping into EU Emissions Trading System

The European Green Deal, adopted by the Commission in December 2019, has tackling climate change and reaching the objectives of the Paris Agreement and other environmental issues (including addressing air pollution) at its core. The 2050 climate neutrality objective, which the Commission proposed in 2018 and the European Council and Parliament endorsed, is one of its central elements. The Commission has proposed to enshrine climate neutrality into EU law. In order to set the EU on a sustainable path achieving climate neutrality by 2050, the Commission has proposed in the Communication on stepping up the EU’s 2030 climate ambition an EU-wide, economy-wide net greenhouse gas emissions reduction target of at least 55% in 2030 (compared to 1990). The Commission will review and propose to revise, where necessary, the key relevant legislation by June 2021. This will include a coherent set of changes to, notably, the EU Emissions Trading System Directive, the Effort Sharing Regulation and the Land Use, Land Use Change and Forestry (LULUCF) Regulation, CO2 Emissions Performance Standards for Cars and Vans and, the Renewable Energy Directive and the Energy Efficiency Directive. The main focus will be concentrated on the EU Emissions Trading System (EU ETS), a key tool for reducing greenhouse-gas emissions and achieving the EU’s climate targets. The Communication on stepping up the EU’s 2030 climate ambition explicitly indicates the need to revise the EU ETS in light of the aforementioned more ambitious target. This includes the extension of the EU ETS to new sectors, such as the maritime sector, which is a sector that requires a basket of measures to ensure its fair contribution to the climate neutrality goal by 2050. Furthermore, the emissions trading system could be expanded to road transport and buildings, and potentially all fossil fuel users.

In 2018, International Maritime Organization (IMO) has made a commitment to reduce carbon emissions by 50% by 2050 compared to 2008 emission levels. It is understandable that the ambitions and intentions of the European institutions to significantly reduce pollution in shipping in the short term by 2030 are creating tensions in the shipping sector. Unfortunately, to date, no technologies have been developed which, from an economic and technological point of view, could be massively deployed in shipping in the next decade and achieve the reduction targets. Today, the measures or methods of reducing pollution – the use of a newer generation of propellers, the design of ships, the digitization of operations, the application of the concept of “slow steaming” – will not allow achieving ambitious goals. By 2030, more pilot projects are likely to be carried out in search of efficient and less polluting fuels, be they electric batteries, methanol, ammonia, hydrogen, or other alternative fuels.

The Lithuanian Shipowners’ Association is of the opinion that pollution reduction issues in shipping must be addressed globally through the IMO organization. The application of the EU Emissions Trading Scheme to shipping could jeopardize international negotiations at the IMO level, potentially increasing political tensions with third countries.