COMMENT: EU ETS threat to shipping is ‘wake-up call’, says EU climate boss Delbeke

Published 18:22 on March 6, 2017  /  Last updated at 12:16 on March 7, 2017  /  Climate Talks, Conversations, EMEA, EU ETS, International, Shipping, Views  /  No Comments

Europe's top climate official Jos Delbeke outlines why the global shipping sector needs a firm emissions objective in its climate action plans and why doubts among EU lawmakers that such work will be sufficiently robust are a wake-up call to all.

By Jos Delbeke, director-general for climate action, European Commission

The historic Paris Agreement concluded in 2015 sets out a global framework to put the world on track to avoid dangerous climate change. It set the target to limit global warming to well below 2C, and to pursue efforts to limit the increase to 1.5C.

All countries are expected to contribute, and all sectors, including international shipping and aviation, need to do their part in the joint effort.

We cannot afford to lose time if we want to remain on track towards a well below 2C trajectory and it is clear that we do not only need swift but also substantial action in all sectors.

The EU has committed to further reduce its greenhouse gas emissions by at least 40% below 1990 levels by 2030. Sectors covered by the EU ETS, such as electricity and heat production, industry and aviation, will have to cut emissions by 43% compared to 2005.

Other sectors, including transport, will need to cut emissions by 30% compared to 2005. This commitment is currently being translated into legislation, and all co-legislators agree on the need to finalise the process swiftly.

Building upon the Paris Agreement, the International Civil Aviation Organisation (ICAO) agreed last year on a global market-based scheme to stabilise CO2 emissions from international aviation. This was a first step and a lot of work remains to be done, but it shows that global action is possible, with the constructive participation of relevant stakeholders including industry.

It is clear that shipping also needs to deliver its fair share to the global efforts – it cannot lag behind, all the more because shipping emissions will grow significantly in the years and decades to come.

GHG EMISSIONS FROM SHIPPING

Maritime transport currently emits around 1 billion tonnes of CO2 annually. This equals the annual emissions from aviation or of a country like Germany.

Without further mitigation measures, maritime transport emissions could grow by 50 to 250% by 2050, according to estimates by an International Maritime Organisation (IMO) study.

These emissions cannot be left unaddressed. We need to embark on a serious process to define the contribution of the shipping sector to the global emission reduction efforts, for the medium and longer term, and on the means to be used to achieve the emission reduction objective.

THE CASE FOR ACTION

Decarbonisation of shipping is necessary and possible, and it will bring co-benefits

The well below 2C objective of the Paris Agreement requires the decarbonisation of the global economy in the second half of the century, and this must include shipping.

From a technical perspective, there are two ways to decarbonise the shipping sector: by reducing the energy consumption and by de-carbonising the fuels used.

Energy consumption can be reduced by improving the technical and operational efficiency of ships and there are a number of technologies that make this possible. The second IMO GHG study identified an energy efficiency improvement potential of 25 to 75% in the sector.

The good news for the sector is that enhanced energy efficiency also makes good economic sense as many measures are cost-effective: reduced fuel bills ensure the pay-back of operational and investment costs.

Improved energy efficiency measures reduce GHG emissions from shipping, and that it should clearly be our priority to create the right regulatory environment and incentives for this.

Beyond this, shipping will have to shift to low-carbon fuels in the long run alongside many other sectors. These fuels need to be based on renewable energy sources and are currently being developed, including power-to-liquid technologies using surplus green electricity. Hydrogen is an example, but there might be other solutions as well.

HOW WILL SHIPPING BE ABLE TO COPE?

History tells us that shipping successfully managed the transition from wind propulsion to steam engines, from steam engines to diesel engines and we now see a switch from high-sulphur fuels to low-sulphur fuels including LNG. The change to low-carbon fuels in the future should build on this experience.

Decarbonisation of shipping is technically possible. New technologies will be needed in addition to energy efficiency improvements, and what we need to do now is to set a clear direction and pave the way for a smooth transition towards a future with low carbon shipping.

To make this happen, we – and I am talking as a regulator – need to translate the vision of low-carbon shipping into concrete emission reduction objectives for the sector. This will create incentives and provide the much needed certainty to industry for making investments with long-term impacts.

ACTION TO ADDRESS GHG EMISSIONS

A global problem of a global sector is best addressed through global measures, complementary to what can and should be done at national and regional levels.

The European Commission argued for this already in its 2013 Communication setting out a strategy to reduce shipping’s GHG emissions and the EU has been promoting the issue for years in the IMO.

The IMO has been addressing GHG emissions from international shipping since 1997. In 2011, it adopted mandatory CO2 standards for new ships, the Energy Efficiency Design Index, and the obligation for ships to carry energy efficiency management plans on board.

However, it is fair to say that the measures adopted so far will only have a limited impact and will not be enough: they will not reduce emissions from today’s levels. IMO figures show that many ships built in 2013 and 2014 already fulfill and go beyond future requirements under the current CO2 standards.

EU ETS THREAT

This raises concerns over the standards’ level of ambition and their effectiveness in incentivising the uptake of more efficient technologies and the development of new technologies.

Furthermore, discussions in the IMO on market-based measures to address shipping emissions have so far been inconclusive.

Given the slow pace of progress at international level, the EU adopted in 2015 the legal framework for monitoring, reporting and verification (MRV) of CO2 emissions from ships as the first step of a gradual approach with target setting and regulatory measures defined as steps 2 and 3.

The EU action triggered the IMO process to introduce a global data collection system for fuel consumption data from ships. The adoption of this system by the IMO last October is certainly an important milestone, although there are significant differences with the EU Regulation, in particular as concerns transparency and data verification requirements.

As soon as the modalities of the IMO global tool are completed, we will compare the two systems to identify to which extent and how an alignment of the EU MRV to the global system is possible and desirable.

Preparatory work is already under way. It is clear that further progress is urgently need in the IMO for medium and long term action on emission reduction from shipping: let’s work together to deliver a credible IMO strategy by 2018, as agreed in the IMO last year.

IMO STRATEGY

The agreement in the IMO last year to adopt in 2018 an initial strategy on the reduction of GHG emissions from ships is an important step in the right direction, provided that it includes an adequate emission reduction objective for the sector.

This was not made explicit in the IMO decision but it is clear that one cannot develop a solid strategy and a basket of measures if these are not guided by an objective to be met. This is the only way to define the fair share of the sector of global emission reduction efforts that should be in line with the well below 2C objective.

This will be a crucial test for the IMO and I know that many policymakers are asking themselves if it can deliver. I detect from the European Parliament discussions on the EU ETS that the trust that it will really happen is not there yet.

I am sure I am not the only one who noted the discussion in the Parliament and the Duncan Report [on ETS reforms] which proposes the introduction of shipping into the EU ETS by 2023 in case no similar action is taken by the IMO.

I understand that this position underlines the high level of frustration in the European Parliament on the lack of IMO progress since the Parliament called in 2002 for the first time for measures to reduce shipping emissions.

We should consider the Parliament’s proposal as a wake-up call addressed to all, Commission, member states and in particular industry, to reinforce efforts in the IMO in view of adequate ambition and meaningful measures.

Let’s work together to influence IMO work. Submissions for the next IMO meeting will soon be tabled, let’s set the ambition right from the beginning.

Our expectation is that IMO will at last deliver a solid and credible strategy, underpinned by an emission reduction objective and adequate means and measures to achieve it.

We cannot afford wasting time, we need to join forces and make sure it will happen in due time.

Jos Delbeke is director-general of the European Commission’s Directorate-General for Climate Action, and as such is the EU’s top climate official and a key architect of the twelve-year-old EU ETS.

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