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THE European Commission has adopted a sweeping package of proposals that aim to reduce the bloc’s emissions by at least 55% by 2030 (compared with 1990 levels). These measures will affect sea freight, international trade and air freight, among many other sectors.

The commission said achieving these emission reductions in the coming decade is crucial to Europe becoming the first “climate neutral continent” by 2050.

“With today’s proposals, the Commission is presenting the legislative tools to deliver on the targets agreed in the European Climate Law and fundamentally transform our economy and society for a fair, green and prosperous future,” the commission said in a statement.

The package proposes to include shipping in the EU Emissions Trading System (ETS). The ETS puts a price on carbon and lowers the cap on emissions from certain economic sectors every year.

As aviation and maritime fuels are a significant source of emissions, the EC’s Alternative Fuels Infrastructure Regulation requires that aircraft and ships have access to clean electricity supplies in major ports and airports.

The FuelEU Maritime Initiative sets a maximum limit on the greenhouse gas content of energy used by ships calling at European ports. The initiative thereby aims to stimulate the uptake of sustainable maritime fuels and zero-emission technologies. Aviation fuel has a similar initiative.

The package also has a new Carbon Border Adjustment Mechanism. This will put a “carbon price” on imports of a selection of products. The EC said this will ensure that European emission reductions contribute to a global emissions decline, instead of pushing carbon-intensive production outside of Europe, while also encouraging industry outside of the EU to take steps in the same direction.

European Commission president Ursula von der Leyen said the fossil fuel economy has reached its limits.

“We want to leave the next generation a healthy planet as well as good jobs and growth that does not hurt our nature,” she said.

“The European Green Deal is our growth strategy that is moving towards a decarbonised economy. Europe was the first continent to declare to be climate neutral in 2050, and now we are the very first ones to put a concrete roadmap on the table. Europe walks the talk on climate policies through innovation, investment and social compensation.”

Commissioner for Transport, Adina Vălean, said with the transport-specific initiatives, the council is supporting the sector’s transition into a “future-proof system”.

“We will create a market for sustainable alternative fuels and low-carbon technologies, while putting in place the right infrastructure to ensure the broad uptake of zero-emission vehicles and vessels,” she said.

“This package will take us beyond greening mobility and logistics. It is a chance to make the EU a lead-market for cutting-edge technologies.”

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Not all are happy

The International Chamber of Shipping secretary general Guy Platten said, “Other than as an ideological revenue raising exercise, which will greatly upset the EU’s trading partners, it’s difficult to see what extending the EU ETS to shipping will achieve towards reducing CO2, particularly as the proposal only covers about 7.5% of shipping’s global emissions”.

“This could seriously put back climate negotiations for the remaining 92.5% of shipping emissions,” he said.

“We know that non-EU States like Japan have already expressed concern over this diplomatic overreach and imposition of a unilateral and extra-territorial tax on trade. It cannot be equitable for non-EU shipping companies to be forced to pay billions of euros to support EU economic recovery plans, particularly under a scheme that undermines CO2 negotiations.”

Mr Platten said it is clear from how such schemes work in other sectors that there will be unintended consequences from the imposition of such a proposal.

“There are simpler and more effective options – such as a global fuel levy – but these require political leadership rather than political expediency. Another key issue for ICS is that who pays for the cost of fuel should be the same person that ultimately pays the cost of carbon allowances,” he said.

“The failure to include investment in research and development in the proposals, at a time when the IEA and the new US administration are highlighting that emission reduction will only be possible with the development of technologies that do not currently exist, is disappointing.

“To indicate one thing at the beginning of the process and then to withdraw it to pay for a post covid recovery sends a clear message to industry that the EU is not truly serious about decarbonising global shipping. This also sends a message beyond shipping that political and investment risk is high in Europe.  This only goes to show why we need the US$5 billion IMO Maritime Research Fund.”

Mr Platten said volatility in the price of allowances makes this approach far more complicated to pass on the cost to the company that pays for the fuel, especially for the small shipping companies that make up the majority of shipping.

“This proposal is overly bureaucratic. The industry’s overwhelming preference is for a global levy which will incentivise real emission reductions rather than red tape,” he said.

“It is clear that there will need to be an independent impact assessment of these proposals as soon as possible, to ensure that we are not sleepwalking towards unmanageable costs for global trade.

“ICS will along with industry partners will be reviewing the latest draft proposals in detail and will continue to highlight these concerns in discussions with the EU Council and the European Parliament. We need urgent action but action must result in decarbonisation rather than a pure money grab.”

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