03 OCT 2020
The international shipping association BIMCO is the latest member of the maritime community to express concerns over the decision to include the shipping industry in the EU Emissions Trading System (ETS). BIMCO in written statement said that the move will “inhibit global action on reducing CO2 emissions.”
In September, the European Parliament moved to include the greenhouse gas (GHG) emissions from ships over 5,000 gross tons in the emissions trading system (ETS) starting in 2022. It is part of the EU’s effort to cut ships’ annual average CO2 emissions by more than 40 percent by 2030. The move to include shipping in the CO2 cap-and-trade system that covers other European industries has been broadly criticized by a broad range of organizations across the shipping industry.
“If the EU implements a regional ETS, shipping risks getting hit by multiple emission trading systems which will make a global MBM (Market Based Measure) much more difficult to achieve,” says David Loosley, BIMCO Secretary General.
Instead, BIMCO urges the EU to work with the international community at the International Maritime Organization (IMO) to get a global market-based measure established, when the required technology is available, which would ensure the industry operates on a level playing field.
The shipping organization believes that a regional imposed solution such as the ETS could lead to stiff opposition and competing responses from other large counties. As an example, BIMCO pointed to the EU’s attempt to unilaterally enforce its ETS on airlines flying in or out of the EU in 2012. BIMCO highlighted the stiff opposition from large countries, such as China, India, and the U.S., to the 2012 initiative. “Given the international political climate in 2020, I see it as much more likely today that the EU ETS will be met with retaliation from its international trading partners over such a move,” Loosley says.
Further, BIMCO highlights data that show that the efforts of regional flights were a failure because they failed to create proper incentives. A study by the ECSA and ICS concluded that the inclusion of regional flights had contributed to a 26 percent rise in emissions from the aviation sector since 2012. Similarly, BIMCO believes that a regional, market-based measure would fail to incentivize shipowners to invest in carbon-reducing technologies.
“When you build a ship, you don’t know how often it will call at EU ports during its 25-year lifetime. That makes it impossible to calculate when an investment in carbon-reducing technology will have paid off. The consequence is that a regional ETS will not change how ships are built, it will just be a tax that ultimately ends up with the consumers,” says Loosley.
Finally, similar to many other organizations in the maritime world, BIMCO believes the EU initiative could also “negatively affect the good faith between IMO member-states,” decreasing the likelihood of a global measure which would have a much stronger effect.
“When there are viable technology solutions commercially available to reduce carbon emissions, BIMCO will fully consider market-based measures to drive the uptake of such technologies,” Loosley says. “In the meantime, BIMCO advocates for an International Maritime Research Fund to drive innovation, paid for by a mandatory contribution on fuel used by ships, into technology the industry needs to cut carbon emissions by 50 percent in 2050 and ultimately eliminate those emissions.”