The appointment of Ursula von der Leyen as the new European Commission President has made headlines this week, as she won the support of parliamentarians with a strong call for climate and environmental action that could transform Europe over the next five years. The new climate policy foresees the inclusion of the maritime sector in the EU Emissions Trading System, following years of contradictory negotiations.
Her 24-page agenda for Europe, under the name ‘A European Green Deal’ shares targets for a more environmentally oriented Europe, with six key areas of focus:
- A climate neutral EU by 2050;
- An improved ETS;
- A carbon border tax;
- A move away from unanimous decision-making on climate and energy;
- 2030 emission reduction targets of at least 50% and moving ‘towards’ 55%.
The call for an improvement in ETS comes two years after shipping was excluded from the ETS. In late 2017, a potential inclusion of shipping in the EU’s Emissions Trading System (ETS) faced strong opposition by shipowners who would rather lobby with the IMO on the imposition of global standards.
What is the ETS
The EU Emissions Trading System is part of the EU’s policy to combat climate change and constitutes the biggest emissions trading system in the world.
Under the EU ETS, a cap is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. The cap is reduced over time so that total emissions fall.
Within the cap, companies receive or buy emission allowances which they can trade with one another as needed. They can also buy limited amounts of international credits from emission-saving projects around the world.
After each year, a company must surrender enough allowances to cover all its emissions, otherwise heavy fines are imposed.
If a company reduces its emissions, it can keep the spare allowances to cover its future needs or else sell them to another company that is short of allowances.
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Why was shipping excluded?
The supporters of shipping’s inclusion in the EU ETS saw a way to push IMO to reach more tangible decisions for minimizing shipping emissions.
However, shipowners through ECSA, as well as other major associations like ICS and Danish Shipping, claimed that putting unrealistic pressure on IMO with regional rather than global measures was not the way to proceed. Instead, a more global and unified approach through the cooperation of EU with the IMO would achieve more tangible results.
As such, the EU opted for giving time to the shipping industry to realize its initial CO2 reduction objectives, demonstrating confidence that the IMO would make efficient progress.
And now?
The vision of the new Commission President for a better score in Europe’s environmental performance comes in conflict with several landmark decisions set by the shipping sector so far.
The decision to exclude shipping, reached in October 2017, determined that EU would include shipping in the trading system from 2023, if IMO had not reached any ambitious agreement on the future of emissions. However, in April 2018, the IMO reached the decision to reduce shipping’s GHG emissions by at least 50% by 2050 compared to 2008.
Notwithstanding the fact that the new vision pledges a carbon neutral Europe by 2050 in contrast with the IMO’s decision of April 2018, the new climate policy also unveils a plan for inclusion of shipping in the EU ETS.
I will propose to extend the Emissions Trading System to cover the maritime sector and reduce the free allowances allocated to airlines over time. I will also propose to extend this further to cover traffic and construction. The different systems will have to converge by 2030 if we are to be climate neutral by 2050,
… Ursula von der Leyen said in her ambitious plan.
