Shipping companies will be able to buy allowances for 100% of ship emissions for voyages within the European Union and for 50% of ship emissions for voyages to or from the EU, as the European Parliament decided to include shipping in the emissions trading system (ETS), gradually from 2024.
The text, which must also be formally approved by the European Council, will then be published in the EU's Official Journal and enter into force 20 days later.
According to the decision, the companies will each time pay for the reported emissions of the previous year, i.e. they will pay for the emissions of 2024 in 2025.
Under this there will be a three-year adjustment period during which shipping companies will be able to buy emission trading rights for 40% of emissions in 2024, then gradually increasing to 75% in 2025 and 100% in 2026.
Initially, gas emissions will cover carbon dioxide, but from 2026, methane and nitrogen oxide emissions will be included too.
Fund creation
The European Parliament also agreed to allocate 20 million ETS allowances, worth about $2 billion from today based on the current carbon price, back to the shipping sector to support the adoption of clean fuels and promote innovation.
According to the text of the decision, shipowners will also be able to pass on costs to commercial operators and charterers when they are responsible for operational decisions affecting ships' gas emissions.
The EU's emissions trading system will also change if the International Maritime Organization (IMO) agrees its own market-based measure to incentivize shipping to move to zero emissions.
Cost between 6 and 7 billion euros per year
The shipping emissions trading scheme is estimated to cost shipping companies between €6 billion and €7 billion a year once 100% of emissions are included from 2026, according to calculations made using current emission levels and recent prices.
"Tackling the climate crisis and decarbonizing shipping is not a matter of "if" but of "how". The allocation of part of the revenues from the SEDE for shipping is a victory for the sector's energy transition. The special support through the Innovation Fund is indeed the key to bridging the price gap with clean fuels", emphasized Sotiris Raptis, Secretary General of the European Shipowners' Association ECSA.
ECSA also welcomes the maintenance of the "polluter pays" principle through mandatory requirements to pass on the costs of EU pollutant trading to commercial ship operators.
It also states that the phase-in period and phasing in emissions from shipping over a three-year period is also vital to ensure a smooth transition for the sector.
Satisfaction of the Union of Greek Shipowners
The Hellenic Shipowners' Association expressed its satisfaction with the basic proposals it had supported since 2021 and are included in the final EU text in an online announcement.
In particular, it states that the "polluter pays" principle is imposed, making the ship's commercial operator responsible for compliance costs, while underlining that part of the revenue of the EU ETS pollution trading system from shipping is earmarked for actions to decarbonize the sector.
“The next step now is to recognize in practice the strategic importance of shipping in order to promote appropriate solutions through the Innovation Fund, which will manage the earmarked revenue. The Innovation Fund must, as a priority, support the development and availability of alternative and safe marine fuels at affordable prices" emphasizes the EEE.
It also points out the need to ensure a level playing field and equal access to the Fund for the many small and medium enterprises in the sector.
source: amna.gr