WSC: EU ETS can drive shipping’s transition to zero carbon

EU ETS price signal needs to promote marine energy transition pathways

According to WSC, many in shipping are eager to build and operate innovative onboard power systems with energy efficient technologies, using renewably derived marine fuels distributed through a sustainable supply network.

An EU ETS emissions pricing policy that is focused only on shipboard emissions – rather than on the full fuel lifecycle emissions – would undermine market incentives to adopt renewably derived fuels

In fact, WSC notes that methanol, synthetic LNG, ammonia and hydrogen are among the potential green fuels for shipping, all derived through processes that consume energy.

Energy for producing fuels can be either green (from renewable sources) or brown (from fossil fuel sources) thus creating brown or green marine fuels. If the EU ETS only considers on-board GHG emissions, brown and green fuels used by ships will get the same treatment even though the full climate impact of brown fuels is significantly worse.”

Vessel owners and operators have a shared responsibility to drive GHG reductions

In addition, in its position, WSC highlights that the EU ETS must engage all parties across the maritime sector. The original Commission text defining ‘company’ and responsible party in both FuelEU Maritime and EU ETS ensures the necessary shared responsibility. Direct responsibility for decisions affecting ship GHG emissions includes:

• The operator working to efficiently provide transport services using onboard technologies and vessel designs;
• The shipowner who determines the onboard technology available and defines the range of fuels and fuel quality allowed.

Modification to exclude technology providers and shipowners is unnecessary and unhelpful. A pass-through mechanism, entitlement, or binding clause would break the fundamental purpose of the EU ETS signal, risking delayed investments needed for shipping to meet GHG targets

Promote competition, avoid GHG leakage, enable IMO agreements

Effective regional climate policies need to work as enablers of global agreements to achieve GHG reduction goals. “The EU is in a unique position to influence the creation of global regulations to achieve global decarbonisation of shipping,” WSC mentioned.

All EU Green Deal goals for the European economy and for GHG reduction targets can be achieved without applying extra-territorial compliance requirements in EU ETS. A regional policy design, based on intra-EU voyages, reduces the risk of GHG leakage and maintains the global competitiveness of EU ports. An intra-EU scope would:

• Minimize the potential for carbon leakages that would undermine EU Green Deal goals
• Strengthen economic incentives for climate action
• Position the EU as frontrunners with the ability to drive global policy through the IMO to reduce shipping’s greenhouse gas emissions internationally.
• Enhance Member State competitiveness internationally.
• Maintain coherence with the necessary supply side requirements for production and distribution of low-carbon marine fuels proposed in the Renewable Energy
• Directive (RED) and Alternative Fuels Infrastructure Directive (AFIR).

In a similar reaction, the Global Maritime Forum (GMF) called on EU policymakers to raise the climate ambition in these policy proposals.

More specifically, Poul Skjaerbaek, Head of Service Innovation, Siemens Gamesa Renewable Energy A/S, Alan Lewis, Technical Director, Smart Freight Centre, Rasmus Bach Nielsen, Global Head of Fuel Decarbonisation, Trafigura, and Kasper Søgaard, Managing Director, Head of Institutional Strategy and Development, Global Maritime Forum, called the EU to explicitly incentivize the production and use of zero emission fuels made from net-zero energy sources which include green and blue hydrogen, ammonia, methanol, and sustainable biofuels.