Liberia agrees with the World Shipping Council (WSC) position that a unilateral EU ETS scheme would undermine efforts to reduce global greenhouse gas emissions currently underway, including the proposal by a broad coalition of industry associations to the IMO for the establishment of an International Maritime Research and Development Board, funded by the industry, to accelerate the introduction of low-carbon and zero-carbon technologies and fuels for shipping.
Alfonso Castillero, Chief Operating Officer of the Liberian International Ship and Corporate Registry (LISCR) commented that
We understand the need for efforts to lower greenhouse gas emissions, and continue to push for a cleaner environment, as well as a more efficient maritime industry. However, at least for international shipping, it is vital we work toward one set of requirements established by the International Maritime Organization (IMO), avoiding the creation of a fractured system of regional requirements that reach beyond their own waters, and assuring a unified global effort to confront this important issue.
Furthermore, he noted that the EU ETS scheme, if implemented, will apply to those waters of EU members, and not become a global scheme.
He adds that if the EU scheme is applied beyond intra-EU voyages, it will distort the global market situation because it will cover voyages not only within the EU, but also voyages to and from the EU as agreed by the EU Parliament.
According to the 2019 EU Annual Report on CO2 emissions, within the EU shipping transports 75% of EU’s external trade, yet only accounted for 3.7% of emissions. Therefore, LISCR stresses that it needs to be fully understood that taxation costs incurred from an ETS will be distributed to the supply and value chains, which will have a genuine impact on the costs of ocean transport
If the EU were to apply its ETS to shipping using the same geographic scope as the EU’s existing MRV regulation, the effect would be to apply a financial charge on voyages that in some cases stretch halfway around the world.
Over half of the covered emissions would result from voyages outside of EU waters. As part of the application to voyages into and out of EU ports, if the ETS provisions were to follow the MRV scope they would also apply to emissions associated with cargoes that are transshipped through the EU, but that are not EU imports or exports. This would have a particularly disproportionate effect on developing countries, an issue which is a key concern to Liberia. This opens up the very real prospect of trade and tax retaliation on a global scale.