The parliamentary groups of the Socialists and Democrats (S&D), Greens and the liberals (ALDE) tabled the proposal. The centre-right group, the European People’s Party (EPP), also supports the inclusion of shipping in the ETS as a way to make the sector contribute to the EU’s 2030 climate target.
The fund will also function as a flow-back mechanism by reinvesting 20% of the allowances’ revenues to make the shipping industry and ports more efficient. This new source of financing is expected to support carbon-saving retrofitting, innovative technologies and port charging schemes. T&E estimates that this would roughly amount to €1 billion at the outset.
The proposal is based on the existing EU monitoring system (MRV) of shipping emissions to keep to a minimum the extra administrative cost for shipowners, ports and authorities. The owners of ships arriving at or departing from EU ports would have to either buy directly EU ETS allowances to cover their CO2 emissions or pay an equivalent amount into the fund that will collectively purchase and retire the required number of allowances on their behalf.
S&D MEP Jytte Guteland said: ‘If Europe is to honour its commitments through the Paris agreement, all sectors will have to contribute to the transition to a low-carbon society. Time is of the essence and the shipping industry has an important role to play in this transition. In setting up a climate fund for shipping allowances, the EU will help industry cut global-warming emissions in a sustainable way by investing 20% of the revenues in green projects for ships and ports.’
Having escaped any explicit reference in the Paris agreement, industry and the IMO are facing increasing pressure to deliver on the climate front. The IMO had started moving towards defining a ‘fair share’ contribution by the shipping sector to curbing climate change, but a decision on a work plan has been delayed at its last meeting in April. It next meets in October.
Green MEP Bas Eickhout said: ‘This is really about reducing emissions from international shipping, the only transport sector not contributing to climate goals in Europe. Since the IMO work can take years to propose, our duty is to make sure that Europe takes action. This is also an opportunity to increase post-Paris EU climate ambition by making EU's reduction target economy-wide.’
The proposed shipping fund would see shipowners pay an annual membership fee based on their annual emissions and the average allowance price the year before. Paying directly into the fund will allow shipowners to contribute to the EU’s 2030 emissions reduction target directly.
T&E’s shipping officer Sotiris Raptis said: ‘The well-below 2°C warming limit set by the Paris Agreement will be impossible to meet unless Europe and the International Maritime Organisation (IMO) introduce measures to cut shipping emissions. Shipping is the only transport sector that is not contributing to Europe’s climate goals. This needs to end as there is no reasonable excuse for this special treatment.’
The EU's legislation on the monitoring, reporting and verification (MRV) of maritime GHG emissions came into force in July 2015 and will become operational in 2018. Last year a European Parliament study found that shipping will be responsible for 17% of the total emissions in 2050 if left unregulated.