European Union lawmakers are set to propose that emissions from all voyages in and out of the bloc are covered by its Emission Trading System (ETS).
The proposal, included in an unofficial draft of the European Parliament's rapporteur on the matter, is meant to force the hand of the International Maritime Organization to introduce, by 2028, carbon pricing equivalent to measures taken within the EU.
If eventually adopted, the proposal would provide much sharper claws than a current version of ETS draft legislation, submitted last year by the European Commission — a different EU institution — that foresees inclusion in the scheme of just 50% of all carbon emitted in voyages between EU and non-EU states.
The draft text obtained by TradeWinds reads: "In the event that there has been insufficient progress at IMO level or that global measures have been adopted at IMO level which are not in line with the Paris Agreement and at least comparable to those resulting from the [European] Union measures, the commission should have the option of being able to extend the Union measures to cover 100% of the emissions."
However, a lot of water has to flow under the bridge before the EU finally adopts any such proposal.
First, the European Parliament has to adopt the rapporteur's proposal that amends the existing EC draft. If parliament endorses the changes, a new round of negotiations will begin between parliament and the governments of member states represented in the European Council — the EU's third main decision-making body.
The European Parliament is known to be pushing a much more radical agenda than the EC or member states. The latter often water down parliament's proposals when adopting finally binding European law.
Shipowners should feel much more relaxed about other proposals by the parliament's rapporteur, which increase charterers' liability for emission costs.
The draft envisages that freight contracts should include binding clauses to make sure that emission costs pass to the entity that is "ultimately responsible for the decisions affecting the CO2 emissions of the ship ... for covering the compliance costs paid by the shipping company".
Compared with language in the existing draft legislation tabled last year by the EC, the rapporteur's text is more skewed towards the interests of shipowners, who want charterers to carry at least part of any cost incurred under the ETS.
The rapporteur also brings back a long-standing parliament proposal that 75% of revenues generated from auctioning of carbon allowances be earmarked for an "Ocean Fund" that will help finance, among other things, research into carbon-free fuels.
Shipowners and some governments, notably Greece, have been longstanding supporters of such a fund.
The ETS for shipping and FuelEU Maritime, another EU initiative, were unveiled in July as part of the long-awaited "Fit for 55" package of climate policies, aimed at reducing the EU's greenhouse gas emissions by 55% below 1990 levels by 2030.
According to current draft legislation, which has not been enacted yet, shipping companies will be responsible for all carbon emissions between EU ports and 50% of emissions for incoming and outgoing voyages.
To ease the financial pain, the EC has proposed that they be liable for only 20% of their emissions in 2023, 45% in 2024 and 70% in 2025.
