Will EU pave the way towards carbon neutrality?

EU’s forthcoming regulation on CO2 emissions from e.g. shipping can be important in paving the way for global regulation. The setup of the system is however crucial. That was one of the points raised at Danish Shipping’s webinar on Fit for 55.

Next week, members of the European Parliament’s Environmental Committee (ENVI) will vote on the proposal of how shipping is to be included in EU’s emissions trading system, ETS. On 6 – 9 June, the European Parliament will vote on the final proposal which will then be negotiated among member countries to reach an agreement in the Council of Ministers.

EU’s Emissions Trading System, ETS is being revised to adapt to EU’s new climate ambition to reduce carbon emissions by a minimum of 55 percent by 2030. This means that shipping will be included in the emissions trading system.

Danish Shipping has a clear goal of carbon neutral shipping by 2050 and by 2030 at least 5 percent of the Danish fleet must sail on carbon neutral fuels. Against this background, Danish Shipping welcomes the proposal, basically wanting to raise the ambition level.

This was the reason why Danish Shipping in collaboration with Linea Søgaard-Lidell, member of the European Parliament for Venstre (the Danish Liberal party) organized a webinar to scrutinize the ongoing ETS negotiations from a Danish perspective.

Linea Søgaard-Lidell who is involved in the negotiation of the Fit for 55 package for the liberal group, Renew Europe, gave the introductory presentation and emphasized the continuous wish for global regulation that includes shipping:

“We need a global solution from IMO, but in its continued absence, in EU we must do as much as we can to push for a worldwide solution. In that context, the emissions trading system has the potential to be a steppingstone towards carbon neutral shipping”, says Linea Søgaard-Lidell and emphasized that EU should set an early starting date for when all shipping to and from EU ports must be included in the carbon regulation.

Danish Shipping has two clear priorities in relation to the ETS:

First, a full life-cycle perspective must be applied which takes into account not only the emissions from the exhaust gas of the ship, but also the production of the fuel. It should pay off to invest in fuels that are based on renewable rather than fossil energy.

Secondly, the contractual relationship between the shipowner and the charterer should not be regulated but should instead be part of the negotiations that already today takes place between the involved parties. The allowance cost must be placed where the market so requires. At the webinar, both Maersk and NORDEN stressed the importance of these two points seen from the perspective of respectively container and tramp shipping.

From Danish Shipping, Maria Skipper Schwenn, Executive Director of Climate, Environment and Security spoke about the importance of adopting an ambitious regulation that promotes actual reductions.

“To reap the full benefits of the ETS regulation we must invest in green fuels. In short, it should cost you fewer allowances if you sail on fuel produced on renewable energy. Basically, all actors must pull in the same direction to initiate and promote the transition. Therefore, it does not help if the allowance cost by law is placed with the charterer.  The shipowner also has a responsibility for the transition and for investing in energy efficiency. The two parties can easily negotiate a contract that ensures payment of the allowance.”

Once the European Parliament has voted, the way is paved for the final negotiations with EU member states about the final regulation which is expected to enter into force at the turn of the year.