Making the EU carbon market shipshape for the maritime sector

The proposed inclusion of international maritime transport in the EU Emissions Trading System (EU ETS) is not only fair and in line with the ‘polluter pays’ principle, but also essential to helping the sector decarbonise.

Due to a lack of progress at the global talks to tackle carbon pollution at the International Maritime Organisation (IMO), it is crucial that the European Union achieves the best possible results during the current reform of the EU ETS.

As the EU institutions embark on the so-called trilogue to find common ground for a final deal on the revision of the EU ETS, here are Carbon Market Watch’s recommendations:

  1. Geographical scope: The best environmental solution would be to cover 100% of international voyages, from and to any port in the European Economic Area (EEA). To this end, we support the European Parliament’s position, which proposed to cover, under the EU ETS, 100% of intra-EEA and 50% of all international voyages, moving to 100% from 2027 onwards (with limited exemptions based on climate action in third countries). However, the proposed exemption for outermost regions should be dropped as this loophole limits the efficiency and effectiveness of the ETS inclusion.
  2. Start date: As the maritime sector has had years to prepare itself for EU ETS inclusion and has detailed data on its greenhouse gas emissions due to the EU maritime Monitoring, Reporting and Verification system, there is no need to delay the inclusion of this sector further. Shipping companies should cover 100% of their verified emissions from 2024 onwards, as proposed by the European Parliament.
  3. Size matters: From the very beginning non-CO2 gasses, such as methane (CH4) and nitrous oxide (N2O) should be included. With regards to vessel size, it is important to expand the scope to vessels from 400 gross tonnage to 5,000 gross tonnage. To this end, we support the European Parliament’s position.
  4. Vessel type: There is no reason to grant further exemptions to the sector. The scope should be expanded to all types of vessels, including ice class, luxury yachts and offshore services. All these exemptions are unfair, unnecessary and limit the efficiency and effectiveness of carbon pricing for the maritime sector. 
  5. Finance: The creation of an Ocean Fund proposed by the European Parliament represents the best funding mechanism option. This fund should receive 75% of the revenues generated from maritime inclusion, supporting projects and investments in different areas, from the deployment of zero-carbon fuels to the energy efficiency of ships and ports, which will help the sector more rapidly decarbonise.
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