European Union to implement an emissions trading system for shipping in 2024

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An agreement has been reached between the institutions of the European Union that will make the maritime transport industry implement an emissions trading system for greenhouse gas emissions – GHG from 2024 accorging to the LoadStar and ShipandBunker.

EU member states, the European Parliament and the European Commission have reached a preliminary agreement on how to introduce shipping into the organization’s emissions trading system. The regulation is likely to be formalized in the coming days.

All ships over 5,000 GT will be included in the ETS, covering 100% of the emissions from intra-EU voyages and 50% of the emissions from voyages between EU ports and the rest of the world. The system will be phased in over three years, with the system starting in 2024 with 40% of costs due, 70% in 2025, and 100% from 2026 onwards.

The initiative is an important step to charge the shipping industry for its GHG emissions and incentivize companies to order new tonnages that run on alternative fuels and install fuel efficiency systems to reduce their fuel consumption.

The carbon price in the EU is currently around EUR 81/mt ($83.93/mt). With around three tonnes of CO2 emitted per tonne of bunker fuel consumed, this system would add around $100/mt to the bunker price for intra-EU travel in 2024, $176/mt in 2025 and $252/mt from 2026.

The policy of the European Union is to pressure the IMO to impose some type of tax at the global level. The Marine Environment Protection Committee (MPEC) will meet to discuss proposals at the IMO in London next month.

According to the LoadStar, in a joint statement by the EU, the EP and the Council of Ministers said that the EU ETS would deliver: “A net climate benefit of 20 million tonnes of CO2. It will also increase revenue and 20 million allocations will be made for specific projects in the shipping sector through the Innovation Fund/Climate Investment Fund.”

Environmental groups have hailed the agreement as “a watershed moment” in the transition to sustainable shipping, adds The LoadStar.

Jacob Armstrong, Sustainable Shipping Officer at Transport & Environment (T&E), said: “Shipping will no longer be allowed to escape its massive climate impact. This ambitious ETS covers all greenhouse gases, ships at sea and ensures funding for green shipping.”

T&E also noted that the inclusion of methane in the ETS will mean that ships running on LNG will also pay for emissions, giving a clear signal that this is not a clean fuel solution for shipping.

Likewise, Armstrong adds that: “The EU has thrown down the gauntlet to other jurisdictions, such as the US, China and Japan, to take this hugely important first step towards emission-free shipping.”

T&E said that following the agreement on shipping, the EU would now turn its attention to extending the aviation ETS to flights to and from Europe, rather than just within the EU, a concession to airlines until 2024. A separate ETS will govern emissions from land transport. .

However, Parliament’s ETS rapporteur, Peter Liese, warned: “There are still very difficult points to be resolved in the ETS negotiations, including free allowances for industry, the innovation fund, the modernization fund and the inclusion of heating and road transport. I hope it will be possible to reach an agreement on these issues at the tripartite meeting on December 16 and 17”.

Source: Ship and Bunker & The LoadStar

Source Ship and Bunker The LoadStar

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