By James Crisp |

European Union member states are likely to oppose the regulation of shipping in draft reforms to the bloc’s carbon market.

Environment ministers are meeting in Brussels today (28 February) and are expected to adopt a general approach on the post-2020 revisions to the Emissions Trading System (ETS) by this evening.

The approach will form the bedrock of their position in inter-institutional talks with the European Parliament. The bill will only become law when both diplomats and MEPs agree on an identical text.

On 16 February, the Parliament backed an amendment to the European Commission’s legislation that would regulate shipping under the ETS, which is the world’s largest carbon market and one of the bloc’s flagship policies to fight climate change.

ETS-regulated businesses measure and report their carbon emissions, handing in one allowance for each tonne they release. Permits can be traded on the markets as an incentive for companies to reduce emissions.

Under the clause, shipping will become ETS-regulated from 2023 if the International Maritime Organisation (IMO) fails to agree to global measures to combat global-warming emissions by 2021.

Yesterday, at an event opening European Shipping Week, Maltese officials signalled that member states opposed the clause.  Malta holds the six-month rotating presidency of the EU and will chair today’s environment minister’s meeting and the inter-institutional talks with MEPs.

IMO talks undermined

David Kerr is head of unit for Transport, Telecommunications and Energy for Malta’s permanent representative to the EU. He said the clause risked undermining talks in the IMO, where both developing and developed nations must agree.

He said, “Let’s work together and let’s make the improvement at international level. For sure it is not easy […] these signals we send at European level are somewhat undermining the process.”

“If we send these messages that the IMO is slow, the IMO isn’t working, it is very sad to hear […] It is important that, as a European Union, we send the signal that we are partners in this process.”

There is a clause in the amendment which stops shipping’s inclusion in the ETS if the IMO does finalise global rules, either before or after the deadline.

The amendment is designed to increase pressure on the IMO to reach a long-delayed global deal to cut shipping emissions.

Climate goals

European cargo companies and the Clean Shipping Index, a non-profit of transport buyers who evaluate shipping companies on their environmental performance, wrote to the Commission, Parliament and Council supporting the move. Shipowners oppose it.

“Despite being tasked by the 1997 Kyoto Protocol asking to limit shipping CO2 emissions, the IMO has yet, 20 years later, to do so,” their letter to the Commission’s Jean-Claude Juncker and Parliament’s Antonio Tajani said.

Supporters of the amendment have argued that including shipping would mean the sector could contribute to the EU’s climate and energy goals.

Those goals, along with the ETS, are the bedrock of the EU’s efforts to meet its Paris Agreement climate commitments. The landmark United Nations deal did not cover shipping or aviation.

IMO Secretary-General Kitack Lim wrote to senior EU officials in January. He told them extending the ETS to cover shipping would be premature and undermine global efforts to curb emissions.

Kerr insisted, “When the IMO is under pressure, it can and will deliver.“Our message as a presidency is let’s work together with industry, stakeholders, the Council, Commission and European Parliament, in order to show we are a true EU and can assist also developing states.”

The differences between developing and developed nations were also a major obstacle to the eventual signing of the Paris Agreement.

“For so many years we have portrayed this industry as a dirty industry. Let’s move forward,” Kerr said at yesterday’s event.

Energy efficiency

Improving energy efficiency on ships can cut emissions and save money. The IMO says that existing technology can reduce consumption and emissions by up to 75%.

The Ship Energy Efficiency Management Plan (SEEMP) is an IMO-brokered tool to manage energy efficiency.  It was made mandatory for all ships over 400GT in July 2011.

Robert Ashdown, secretary general of the International Association of Classification Societies, said SEEMP was the first legally binding climate treaty to be struck since Kyoto. Kyoto was the precursor to the Paris Agreement.

SEEMP should become an integral part of company management systems, without increasing the administrative burden of those on board, said Tore Longva, of DNV GL, an international certification and classification society.

It should monitor current status of energy uses, collect emissions data continuously and consistency and show a trend of efficiency improvement, he added.

“Big shipping companies are worried about the cost but look into future it is not just about cost but something much bigger,” said Martti Alatalo, director of marine and offshore at Danfoss Drives.

Hybridisation with electricity from renewable energy could further cut pollution, he added.

Alatalo said that digitalisation and the cloud would make it easier to monitor and report shipping emissions. Under the global sulphur directive, ships’ fuel cannot contain more than 0.5% sulphur from 2020.

“Digitalisation opens new opportunities,” he said, “vessels will be more intelligent in the future.”

But greater digitalisation also increases the need for cybersecurity to prevent hacking or the manipulation of emissions data.

“The incentive to cheat is severe,” warned Allan Skouboe, chief technical officer of Danfoss Ixa, which develops sensors and systems for the maritime industry.

“We want to talk about cybersecurity because this is a fast moving area and probably one of areas that regulation will struggle to catch up with,” added Ashdown.