GHG Emissions in Shipping
With a projected increase in global GHG emissions in shipping of up to 130% by 2050 (compared to 2008), practicable and science-based policy solutions are needed if the EU is to realise its ambition of climate neutrality by 2050, and stay within the boundaries of the Paris agreement more broadly. At the same time, the distinctly global nature of the shipping market necessitates that global solutions are sought to drive down emissions overall, and avoid carbon leakage though fuel bunkering just outside the EU.
Fully supportive of the EU, Green Deal, FuelsEurope as part of its Clean Fuels for All Strategy outlines how low-carbon liquid fuels for transport could contribute to the EU net climate neutrality goal. While a number of studies attest to their GHG savings potential, the commercialisation of low carbon liquids has so far been slow, impeded by the high costs for first movers, very limited demand, the absence of a coherent policy framework, and international competitive pressures. As such, we are encouraged to see that the EU Commission set itself the ambition to advance the up-take of sustainable marine fuels.
To ensure the success of the EU’s decarbonisation strategy for the maritime sector, we believe the following design principles to be essential enablers:
- Given the international market structure of the shipping sector, global approaches should be the primary lever to drive the reduction of GHG emissions. We hence invite the EU to collaborate closely with its partners in the IMO, as well as endeavour to avoid climate ambition gaps between the EU and the rest of the world in the maritime sector, and regulatory overlap with the IMO energy efficiency design index (EEDI) and ship energy efficiency management plan (SEEMP).
- To curb the GHG emissions from the shipping sector efficiently, any policy regime should consider GHG abatement along the full value chain of marine transport, from efficient ship design and ship operation, over low-carbon port infrastructure, to sustainable marine fuels.
- As part of any basket of policy solutions, establishing a market for low-carbon marine fuels will be an essential component. Key enablers of such a market would be a sufficiently high carbon price, predictable regulatory framework, investment certainty, a well-to-wake consideration of shipping emissions to support their long-term sustainability, as well as a technology neutral approach.
- If the EU wishes to move ahead of the international community with regard to shipping decarbonisation and create the enabling conditions for a low carbon marine fuels market, it should do so in a manner that avoids carbon leakage, safeguards the competitiveness of the EU shipping sector and marine fuel industry, and avoids frictions or redundancies between global and national policy schemes. Options for the EU could include:
- Integration of shipping into a dedicated, stand-alone cap & trade system;
- Regulation on sustainable marine fuels through carbon intensity requirements;
- Policy levers that provide investment support, which may include fiscal measures.