BRUSSELS has finally come out with its plans to overhaul the EU ETS, and the result for shipping looks pretty good overall, with some important caveats.

The World Shipping Council got its request for 100m carbon credits (EUAs) to be recycled and used to clean up the industry, plus another 10m EUAs for good measure.

Carve-outs for ice-class ships and islands are extended to 2035, and there are measures to prevent double-taxing if the IMO adopts a global GHG regulation.

What happens if it does? The situation is unchanged: Europe may roll its rules back, if it deems the IMO measure effective enough.

This is disappointing for shipowners, who want a rolled-gold guarantee from Brussels to scrap the ETS. But they were never going to get such a guarantee, given the importance of the EU rules as a bargaining chip for Brussels at the IMO, and as a revenue-raiser for governments.

The inclusion of smaller ships (400-5,000 gt) in the ETS will be divisive. But the extension was long expected, and smaller ships are much easier to decarbonise.

More problematic is the European Commission’s criteria for including more non-EU ports, to crack down on evasive calls outside the bloc. These will fuel more debates about fairness and the EU’s right to impose costs on other countries’ consumers.

This is only the beginning of years of debate in the European Parliament and Council about overhauling the ETS.

For maritime, the ETS is a poor substitute for a global GHG framework for maritime, and most in the industry would love to see it gone.

But since that’s not an option, the next best thing is ensuring shipping keeps as much of the revenue as it can to help develop future technologies that can make a real difference.

Declan Bush
Senior reporter, Lloyd’s List

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