Government ministers are in the process of carving out €20 billion worth of exemptions for the shipping industry in the new maritime carbon market, the EU Emissions Trading System (ETS), according to a new report.
Transport & Environment (T&E), which carried out the report, has called on governments to put the ‘polluter pays’ principle first and end giveaways to the shipping industry saying it has a poor environmental record.
This comes after the European Commission announced its landmark decision last year to bring shipping into the EU’s carbon market. The proposal is now in the phase where national governments thrash out the final details of the proposal with the Commission and European Parliament.
Governments want to gradually phase-in the ETS – when the carbon market fully kicks in – while the EU Parliament has proposed to start the scheme in 2023 without a phase-in. If scrapped, according to the parliamentary proposal, emissions coverage would increase by 154 MtCO2 over seven years.
Jacob Armstrong, sustainable shipping officer at T&E, said: “The ETS is a landmark opportunity to tax pollution from vessels and use that money to fund shipping’s decarbonisation. A delayed phase-in of the carbon market for shipping instead risks handing a large, unwarranted subsidy to big business.”
In the European Commission’s original proposal, all ships of under 5000 gross tonnage (GT) are exempt, despite sizeable emissions coming from these ships. Heavily emitting ships serving offshore oil and gas facilities are also excluded. The proposal only covers carbon dioxide, letting methane leaked from LNG ships off the hook.
The European Parliament removed most of the exemptions from the Commission’s proposal earlier this year, however EU member states have now proposed a much less ambitious proposal. Spain and Greece, for example, are seeking exemptions for ferries to islands, while Finland wants to exempt ice-going ships.
“National interests are making a mockery of the polluter pays principle. Ferries are easy to electrify, while offshore oil and gas servicing ships are heavy polluters. They should not be exempted. Introducing a carbon market for shipping is a major step forward, but for it to work effectively, countries cannot pick and choose which emissions are worth pricing,” said Armstrong.
The Council’s position – which reflects those of national governments – gives a total of €20bn worth of additional exemptions between 2023 and 2030 compared with the EU executive body’s landmark proposal in 2021. The European Parliament’s position, on the other hand, would increase revenues by €43 billion, as T&E’s analysis shows.
T&E has recommended that the EU adopts the most ambitious carbon market possible and uses the funds to support the deployment of green shipping fuels, such as hydrogen, in this decade.
