Market News

 January 24, 2012
EU launches attempt to deliver shipping emissions trading scheme

 The EU is asking for views on how best to reduce greenhouse gas emissions from shipping in a move that could pave the way for the sector to follow aviation into the bloc's carbon trading scheme.

A consultation document published last week considers a number of options for curbing emissions, including a market-based mechanism that would apply to ships' emissions from the port they left to any EU port, and then on to the next port of call.

This could mean bringing shipping into the EU's emissions trading scheme, a move that would require carriers to purchase carbon allowances to cover the CO2 they produce.

However, the consultation document alternatively proposes a straight tax on bunker fuel or emissions, the levelling of carbon caps on vessels, and a "compensation fund" that would see companies make payments in line with the environmental damage the industry causes.

Although an EU source told BusinessGreen there is "no preferred option," the EU has made noises about taking shipping into the emissions trading scheme (EU ETS) in the past.

Shipping emissions account for approximately three per cent of current global CO2 emissions, but are expected to more than double by 2050 if no additional measures are taken to reduce the sector's carbon footprint.

Long-running talks at the International Maritime Organisation (IMO) have come up with a series of efficiency targets, which the UN body estimates will cut emissions by a quarter over the next 20 years.

But the EU noted in a statement accompanying its consultation that "there has been only limited progress to date on the necessary technical, operational and market-based measures for new and existing ships".

European Legislation compelled the EU to take action if no international agreement to deal with maritime emissions was in place by the end of 2011 to help meet its own target of a 20 per cent emissions cut across all sectors by 2020.

While the industry recognises the problem, it is highly unlikely to support any regional attempt to reduce emissions, arguing that any new green policy measures should be applicable worldwide in order to avoid trade disparities.

The arguments mirror the row over the EU's attempts to shoehorn airlines into the ETS, which this year saw airlines forced into the emissions trading scheme for the first time, despite legal and political efforts to overturn the EU's decision.

The EU again appears to be ready for a scrap with the shipping industry and other governments, and is already arguing that with the international community failing to act it has the right to introduce its own emissions-reduction regime.

"The introduction of measures to cut emissions will also limit fuel consumption -- reducing ships' fuel bills by many billions of euros each year -- and hence bring down transport costs," it said in a statement. "Such action will also stimulate demand for 'low-carbon' maritime equipment and services."

A spokeswoman for the IMO said the organisation had no comment to make on the consultation, but pointed out that "moving forward on market-based measures" was one of the main items on the Marine Environment Committee's agenda when it meets at the end of next month.