High time the maritime sector sailed into the EU carbon market

The EU is considering putting a price on carbon pollution from ships in the absence of movement in the international talks. While not enough to curb the sector’s soaring emissions, bringing it under Europe’s carbon market would be a big step in the right direction.

Right now finding the solutions to cut greenhouse gas (GHG) emissions from maritime emissions is the responsibility of the International Maritime Organisation (IMO) – a UN body notorious for dragging its feet when it comes to tackling climate change. Shipping accounts for 3% of global greenhouse gas emissions, and this could grow by between 50 and 250% by 2050 if no action is taken. 

While countries agreed in 2018 to halving maritime GHG emissions by 2050 compared to 2008, since then there is no real progress on how that would be done. 

However, there are short-term measures available that could have a significant impact on maritime emissions: for example, reducing the speed of ships by 20% would decrease their GHG emissions by 34%.

European Commission President von der Leyen has included climate action for the shipping industry in her political agenda, her European Green Deal includes a prospect to include this sector in the EU Emissions Trading System (EU ETS). 

Slow-steaming ships is good for the climate, slow-steaming in policymaking isn’t

But now the European Parliament has an exceptional chance to push global action in this international sector sooner rather than later. 

The revision of the EU’s “monitoring, reporting and verification of CO2 emissions from maritime transport regulation“ (the “MRV Regulation”) is considered by the European Parliament as an avenue for including the ships going to and from EU ports into the EU ETS.

And Jutta Paulus, the lawmaker in charge of this file in the European Parliament, is following that path – leading to the possibility of maritime transport finally having to pay for its pollution. During a debate in the European Parliament, she said: “I think it’s high time we act on emissions, and not only count them”. And we couldn’t agree more.

On its own, the price signal from the EU ETS will not be enough to decarbonize this sector. However, two other tools have been brought into discussions on maritime GHG emissions in the EU ETS: 

  • The establishment of the “Maritime Transport Decarbonization Fund”. This fund will recycle EU ETS revenues generated by the shipping sector into supporting decarbonization actions and innovation in the sector itself. This could mobilize between 1 and 3.5 billion EUR annually for climate action in this sector.
  •  A binding target to force shipping companies to reduce the carbon intensity of their transport by at least 40% by 2030 compared to 2018.

These three measures together (EU ETS, Maritime Transport Decarbonization Fund and emissions efficiency target) could be a game-changer for the EU’s shipping industry. They will put a price on carbon pollution, stimulate investments and innovation into decarbonization, create jobs in the clean shipping industry and push for short-term climate action.

The devil could be in the details

While we support the development of these three instruments, there are, however, a few pitfalls that must be avoided.

First, the Maritime Transport Decarbonization Fund should not waste money and time on technologies and fuels that might do more harm than good. At the moment the door is left open for investments in fuels such as biofuels, ammonia and hydrogen that can currently not be produced at sufficient quantities in climate-friendly ways. The fund should focus on no-regrets options such as renewable energy and energy efficiency breakthrough technologies. 

Second, there should not be any free allocation of pollution permits or possibility for using offsetting for the shipping industry. These would seriously undermine the incentive for the shipping industry to decarbonize.

Third, ideally, all GHGs would be covered by this scheme – at the moment only CO2 is, and discussions are ongoing on methane. There is room to expand the scope, or at the very least set a clear timetable for the inclusion of other harmful gasses while the European Commission starts measuring these emissions.

Lastly, and most importantly, the lacklustre and slow progress in the IMO should not be the only reason for the EU to start tackling shipping emissions as soon as possible. While a global approach to reducing emissions from maritime transportation would, in theory, be the most efficient – we cannot afford to wait. 

Inclusion of shipping in the EU ETS will not undermine any climate action the IMO might decide upon, and could even provide a framework and example for global carbon pricing in this sector. In the meantime, the EU should show international leadership and make the shipping industry clean up its act.