How to get the EU’s carbon pricing for shipping right

January 18, 2022

The EU Commission's proposal to include shipping in the Emissions Trading System (ETS) represents a positive step towards decarbonising the sector. However, some issues still need be ironed out.

T&E outlines a number of ways that the EU’s shipping ETS could be improved:

  • An additional mechanism in the ETS to bridge the fuel price gap for shipping;
  • Shipping Carbon Contracts for Difference (CCfDs) through a dedicated Ocean Fund to de-risk the operational costs of the first-moving companies;
  • Getting rid of the phase-in period;
  • Reducing the threshold from 5,000GT to 400GT;
  • Fleshing out mechanisms to address carbon leakage in peripheral transhipment ports

This is all contingent upon retaining and strengthening the scope of the legislation, without which, the European Union will delay shipping decarbonisation for years and ultimately endanger both its climate objectives and the wider Paris Agreement. This briefing will detail how the shipping ETS proposal should be amended to achieve its ultimate goal.

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