SIMIC

The three policymaking bodies - the European Commission, European Parliament, and European Council - meet November 29 in a final negotiating round to thrash out differences in how the EU Emissions Trading System (ETS) will be structured.

Specifically, they feared that revenue generated from the inclusion of shipping in the ETS carbon tax will not go to shipping as anticipated, but diverted to fund other European Commission priorities.

The maritime industry's other concern was that ETS prices are being set based on fuels that emit zero carbon during consumption but have a large climate footprint during their extraction and production considerations, factors that are ignored in calculating the tax.

"To support shipping's transition to renewably produced marine fuels, the EU ETS must provide the right signal, taking into consideration the greenhouse gas (GHG) emissions of fuels across their full life cycle," said Jim Corbett, environmental director for Europe at the World Shipping Council (WSC).

Mr Corbett made the statement in an open letter to the European tripartite bodies from the WSC, Danish Shipping, the Methanol Institute, Renewable Hydrogen Coalition, Royal Association of Netherlands Shipowners and the Swedish Shipowners' Association.

"We are concerned that the current ETS language for maritime unintentionally favours so-called brown fuels from fossil production that increase GHGs," he said.

Mr Corbett explained that when a price is set for the fuel emissions, it's important that a fuel is not considered green if it had left a significant climate footprint during extraction and production.

"Liner carriers are already investing in alternative fuels and technologies and urge the EU to ensure policies are geared to accelerate investments in the necessary renewably derived fuels by adopting a full life-cycle perspective," he said.

"Aligning EU ETS pricing with other EU Green Deal measures also supports Europe's potential to become a major producer of renewable marine fuels," said Mr Corbett.

Europe's ETS will be extended to include shipping from January 1, when ship operators will be required to buy and surrender ETS emission allowances, known as EU Allowances, for each ton of carbon dioxide (CO2) emissions reported under the scope of the system, with penalties levied for noncompliance.