During the 2023 GREEN4SEA Athens Forum, Mrs. Luisa Puccio, Director of Shipping & Trade Policy at European Community Shipowners’ Associations (ECSA) gave a presentation on EU’s latest developments on shipping decarbonization under the Fit for 55 package. She also pointed out the importance of the inclusion of shipping in the EU ETS and the new Fuel EU maritime regulation.
The EU Green Deal goal is to reduce emissions by 90% across all forms of transportation by 2050. The EU’s Sustainable Mobility Strategy, issued in 2021, acknowledges that shipping and waterborne transport is one of the most difficult industries to decarbonize.
Achieving shipping decarbonization goals at EU level
According to European regulators, access to renewable and low-carbon fuels, zero-emission propulsion systems, and policies such as carbon pricing are required for shipping to be decarbonized. In addition, suitable refueling infrastructure must be established. However, all of this necessitates proper financial access.
Fit for 55 package legislations
- The inclusion of shipping in EU ETS
- Fuel EU regulation on the fuel side of things
- Renewable energy directive which deals with the production of fuel on a broader scale, not just for shipping
- Alternative fuel infrastructure regulation which deals with development of transport infrastructure including bunkering
- Energy taxation directive
At the European level, sustainable shipping requires clarity on what is under examination as well as the goals and requirements to be met. As mentioned before, finance is required to solve these issues. Shipping will pay for its carbon emissions under the EU ETS, which will go into effect later this year. It’s a phased method that begins in 2024 with pollution measurement and progresses to payment in 2025.
The shipping company shares responsibility for surrendering ETS allowances. Yet, if a commercial operator is responsible for the purchase of fuel and the operation of the ship, the directive requires that the cost be passed on to the operator.
The objective of the EU ETS was a key topic in the discussions. The concept was encouraged, as was the idea that it would be supported by a system that could actually work and kickstart the industry’s decarbonization.
One good element that the European Commission is working on is eligibility of projects. The Innovation Fund had, until now, a very strict European remit. However, it was agreed during the negotiations that because shipping is a global industry, geographical criteria cannot be applied in this case. The Innovation Fund Expert Group must still specify the requirements for shipping.
Most likely, the innovations will turn towards these three things
- The improvement of energy efficiency of ships and ports
- Innovative technology of infrastructure
- Deployment of sustainable alternative fuel and zero emission propulsion technologies
One of the criteria that needs to be stressed is the inclusion of transition technologies besides innovative. These resources are needed to bridge the gap of where we are now to where we need to be in 10 or 15 years.
Bridging the gap
Another major difficulty for EU regulators is bridging the gap between conventional and new fuels, which are either accessible but expensive or will soon be available at a higher price.
The national level
The EU will receive 25% of total ETS income, while its Member States will receive 75%. The revenues must be used entirely on climate-related activities. As a result, the European envelope is not the only item that may jumpstart decarbonization. It is critical that the industry recognizes the importance of the national level. The industry parties can also approach local governments and ask that the money be used on shipping.
The Net-zero Industry Act, a recent development in European legislation, is the EU’s counterpart to the US Inflation Reduction Act. The Act’s goal is to strengthen European manufacturing technology and strategic net zero technologies. Shipping and transportation may not be included, however capacity for marine fuels and technologies for decarbonizing shipping can be created in Europe.
Before this may happen, a few actions must be taken. For example, aside from the strategic net-zero technologies already included, such as offshore wind, batteries, and hydrogen, real fuel marine production should be integrated.
Conclusion
At the European level, there is a great chance to ensure that all of the resources invested in this work are eventually transformed into dedicated manufacturing capacity for marine fuels. This is the first step to kickstart the decarbonization process.
Above article is a transcript from Mrs. Puccio’s presentation during the during the 2023 GREEN4SEA Athens Forum. with minor edits for clarification purposes.
Explore more by watching her video presentation here below:
The views presented are only those of the author and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes only.
