Speaking from the UN Climate Change Conference in Bonn, ICS Director of Policy, Simon Bennett, has commented on the provisional decision by the European Union not to include shipping within the full scope of the regional EU Emissions Trading System (ETS).

Namely, according to Mr. Bennett, this demonstrates confidence within the EU institutions in the current progress being made at IMO to develop an ambitious strategy that will deliver additional CO2 reduction measures, consistent with the shipping industry’s own vision of zero emissions, as soon as possible.

“We understand that the date which the EU has agreed for when the European Commission will next closely examine the progress that has been made globally is consistent with those time lines agreed by all IMO Member States,” added Mr. Bennett.

ICS believes the decision also shows a welcome recognition within the EU, including the European Commission, that ETS, is an inappropriate tool for application to an industry like shipping. This is because of the huge risk of creating serious market distortions and the administrative challenge of incorporating tens of thousands of ships operated by thousands of SMEs into a discredited system which the EU is already struggling to reform.

“The industry does not support the concept of Market Based Measures (MBM),”  said Mr Bennett. “But in the event that, as part of the IMO strategy, MBMs are included as a possible candidate measure, today’s EU decision does at least make it more likely that the type of MBM that might be explored would be a global fuel levy.

“And compared to the nightmare of a regional ETS, a global fuel levy would clearly be the preference of the vast majority of shipowners should an MBM ever be imposed on them.”

The European Parliament and Council reached a provisional agreement on 09 November to revise the EU Emissions Trading System (EU ETS) for the period after 2020. This revision will contribute to put the EU on track to achieving a significant part of its commitment under the Paris Agreement to reduce greenhouse gas emissions by at least 40% by 2030.

Specifically, the following were agreed:

  • Significant changes to the system in order to speed up emissions reductions and strengthen the Market Stability Reserve to speed up the reduction of the current oversupply of allowances on the carbon market;
  • Additional safeguards to provide European industry with extra protection, if needed, against the risk of carbon leakage;
  • Several support mechanisms to help the industry and the power sectors meet the innovation and investment challenges of the transition to a low-carbon economy.

The EU Emissions Trading Scheme puts a cap on the carbon dioxide (CO2) emitted by more than 11,000 installations in the power sector and energy intensive industry through a market-based cap and trade system.