The European Union is on course to extend its emission trading scheme to shipping but is yet to decide which voyages should actually be included. New analysis insists that shippers should not try and game the system, as the potential savings on offer are negligible.
Shipping is currently exempt from the emissions trading scheme (ETS) but that is set to change next year, as the European Commission is scheduled to publish its plan for expanding and tweaking the rules of the carbon market.
The exact details of the extension are yet to be ironed out and the Commission has still not decided whether to charge all voyages in and out of EU waters or limit it to domestic trips only.
Aviation is already subject to ETS charges but only intra-EU flights are included. International trips were exempted by the Commission back in 2012 when aviation was folded into the carbon market after airlines successfully lobbied the executive.
The industry is firmly opposed to any charges being levied outside of Union waters – urging the EU to let the International Maritime Organisation regulate the sector – and it has been suggested that shippers could deploy ‘evasive port calls’ to reduce ETS obligations.
An evasive port call would involve vessels docking at non-EU ports in neighbouring countries such as Morocco or the United Kingdom before sailing on to their final destinations and only paying for the short final leg of the journey.
The Commission is reportedly wary of including international voyages if shippers would just game the system; however, new analysis from clean mobility group T&E insists that the potential savings offered by evasive port calls are negligible.
“The study demonstrates that horror stories of massive carbon leakage if ships were included in a carbon market are false. The EU has little to fear from shipowners evading its ports to make non-existent savings,” said shipping expert Sofie Dufour.
According to Transport & Environment, a Brussels-based NGO, shippers stand to generate a maximum of 7% savings depending on which combination of voyages is applied. Any financial benefit gained would be negated by extra fuel and port charges, the study adds.
For a Singapore to Spain trip, assuming a carbon price of €30 per tonne of CO2, a shipper would spend an average of €950 in transport costs per container and an extra €16.50 in ETS charges.
It is arguably in the Commission’s financial interests for shipping to pay more into the bloc’s coffers, as pollution permit revenues will go towards developing new technologies and potentially the EU’s repayments on its €750 billion virus recovery fund.
Green MEP Jutta Paulus, who is in charge of negotiating for the European Parliament in upcoming talks on ETS expansion, told EURACTIV that shippers will find it difficult to evade pollution charges if the Parliament gets its way.
“In our proposal, it is very clear that a “port call” does not mean stopping for a coffee break or bunkering fuel, but that you have to load or unload a substantial part of your cargo or passengers,” Paulus explained.
She added that “I do not see ships throwing off containers or picking up dozens of passengers in the UK to avoid a comparatively small surcharge. As sea transport is so incredibly cheap, I do not see the risk of carbon leakage here.”
The Parliament is also keen to push for “full scope” emissions charging, which would mean the entire journey being subject to ETS payments if it finishes in an EU port. Paulus said she would accept “semi-scope” charging if other parts of the world adopt similar schemes.
“As soon as another country or economic area prices shipping, we could agree with that country for a 50/50 split for these voyages,” she suggested.
Negotiations will not kick off in 2020, as the German presidency of the Council has confirmed that there will not be enough time for the member state body to broker a joint position in time.
It is difficult to gauge what the Council’s approach will be, given the divergences between their shipping sectors and lack of uniform red lines.
Greece, Malta and Cyprus, for example, have a huge vested interest in international shipping, while others see more traffic between EU ports and would therefore be against charges that are limited to intra-EU only.
Last week’s agreement by EU leaders to back at least 55% net emissions cuts by 2030 could also convince the Commission to pursue a ‘full-fat’ shipping ETS option, as pollution reductions across the board will have to be made in order to meet that target.
As part of the executive’s new transport strategy, also published last week, the Commission wants to see zero-emission ocean-going vessels in service by 2030. A mixture of battery-electric, hydrogen and ammonia technology are best placed to play a role.
[Edited by Zoran Radosavljevic]