Under the proposed ETS Maritime, shipping companies will have to buy carbon credits for their pollution on voyages within Europe and for 50% of their emissions when travelling between EU and non-EU ports or in the opposite direction. T&E welcomed the proposals to extend the EU emissions trading system to shipping and, for the first time, to tax shipping companies for part of the fossil fuel they purchase. The sector has escaped taxation for decades and was even exempted from the recent global minimum corporate tax requirements agreed by world leaders.
Faig Abbasov, shipping programme director at T&E, said: “The EU is finally making shipping polluters pay. Now lawmakers need to defend a carbon market that covers extra-European voyages, so that the biggest shipping companies are not let off the hook. The ETS revenues should be reinvested in deploying zero-emission vessels, port charging, and hydrogen refuelling infrastructure.”
But worryingly, the FuelEU Maritime proposal could lead to more than half (55%) of the energy used by ships calling at EU ports being LNG and biofuels by 2035, according to T&E’s analysis. This is despite LNG offering minimal emissions reductions and releasing methane – a global warming gas up to 36 times more potent than CO2 .
Meanwhile, the European Commission proposed a new infrastructure law (AFIR) requiring major ports to spend billions installing gas refuelling infrastructure for ships, helping lock in decades of fossil-fuel burning. In contrast, neither legislation requires or incentivises the deployment of genuinely sustainable e-fuels based on green hydrogen.
Faig Abbasov said: “The World Bank, IEA, shipyards and shipowners now recognise the pivotal role of green hydrogen in decarbonising shipping. The Commission remains the only major institution still recklessly pushing the industry to invest in LNG ships that will lock us into decades of further pollution and stranded assets. Governments and MEPs need to shift the focus onto promoting renewable hydrogen and ammonia instead.”