EU proposal for polluter pays principle cautiously welcomed by INTERCARGO

The recent proposal by MEP Peter Liese to update the EU emissions trading system (ETS) draft directive and support the ‘polluter pays’ principle is cautiously welcomed by INTERCARGO.

The association said that “this recognition that often the shipping company is not the commercial entity controlling the ship operation, and thus is not responsible for the resulting GHG emissions, is long overdue.”

More specifically, INTERCARGO Chairman, Dimitrios Fafalios, said that INTERCARGO retains its reservations on the EU emissions trading system (ETS) as a whole, it is pleased to see the EU take steps in the right direction, as regulators finally grasp some of the realities of our industry.

Trading patterns within the dry bulk sector are diverse and dispersed. A significant share of the bulk carriers’ operation is administered by charterers, which not only take responsibility for purchasing the fuel, but also take operational decisions that directly affect the CO2 emissions of the ship, such as speed of transit

At the same time, Mr. Fafalios adds, while the proposal recognises the need to establish a contractual requirement between the shipowner and commercial operator to pass on the costs, it must be understood that this will be easier said than done.

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Despite this move, INTERCARGO is still committed to supporting the role of the IMO for driving the elimination of all CO2 emissions from shipping worldwide.

The association does, however, support any initiative designed to ease this transition for ship operators, and as such supports Mr Liese’s proposal for the establishment of an Ocean Fund to finance R&D into maritime decarbonisation and to fund R&D projects aimed at bridging the price gap between cleaner and conventional fuels.

The Greek shipowners also welcomed European Parliament’s Report’s recognition of the commercial operators’ structural role in shipping’s decarbonisation and the need for a sector dedicated Fund.

UGS said that the submitted report addresses the shipping industry’s concerns to a significant extent, mainly by recognising the commercial operators’ structural role in shipping and for its decarbonisation, in line with “the polluter pays” principle as well as the need for a sector-dedicated Fund.

INTERTANKO also supported the recent proposal by MEP Peter Liese, with Paolo d’Amico, chairman of INTERTANKO, saying:

The proposed amendments to the EU ETS are a step in the right direction and support the principle that the commercial entity responsible for transportation at sea should also be responsible for meeting the obligations under the EU ETS

On the other hand, after the EU Parliament’s Rapporteur published his draft report on a proposal to revise the Emissions Trading System (ETS) Directive, the World Shipping Council (WSC) raises concerns.

More specifically, WSC has two primary concerns:

The proposed changed definition of “responsible entity” would corrupt the ETS: The proposed amendments are intended to shield shipowners from ETS costs and then provide them with front-of-line access to ETS revenues such as the Ocean Fund. This would corrupt the whole idea of the ETS, changing it from a “polluter-pays” policy to a system where the “polluter-gets-paid”, and vastly reduce its effectiveness. A market incentive for technological change that cannot be applied to shipowners who control the pace of shipboard technology innovation will fail to achieve EU Green Deal goals, slowing down the pace of transition.
The bilateral agreements proposed would undermine progress towards global GHG policy: Other amendments direct the European Commission to abandon its principle of multilateralism and engage in bilateral deals with nations to extend carbon pricing only for routes serving Europe. This would be a costly distraction, undermining progress towards global GHG policy at the IMO and slowing progress toward decarbonising shipping. It would also undermine the GHG and economic goals of the EU Green Deal, amplifying the risks identified in EU impact assessments – GHG leakage, loss of EU port competitiveness, and distortion of trade.