Photo: Illustration. Image by Navingo

European shipowners call for sector-dedicated fund under EU ETS

In a new policy paper, European shipowners have supported a dedicated fund to be set up under the EU Emission Trading System (EU ETS) to stabilise the carbon price.

The policy paper on the EU ETS ECSA was published on 2 November by the European Community Shipowners’ Associations (ECSA).

ECSA also believes that any revenues generated under the EU ETS should be used to financially support R&D projects and should contribute to lowering the price differential between cleaner and conventional fuels.

Image by ECSA

The EU ETS proposal makes a reference in Recitals 33 and 35 to the financing of the decarbonisation of the sector under the innovation fund, including through the carbon contracts for difference. However, there is no legally binding commitment in the articles of the proposal to earmark revenues for the shipping sector.

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“Even though our first preference always is an international regulation for shipping at IMO level, the sector should contribute its fair share to address the climate crisis at EU level as well,” Claes Berglund, ECSA’s President, commented.

“ECSA advocates for a dedicated fund to be set up under the EU ETS to stabilise the carbon price, which is especially important for the many shipping SMEs. Importantly, generated revenues should support the uptake of clean fuels.”

As explained, ECSA supports the proper implementation of the ‘polluter pays’ principle and the pass-through of the costs of the EU ETS to the entity responsible for taking operational decisions, which affect the CO2 emissions of a ship.

In this regard, ECSA welcomed the recognition of the role of the commercial operator in the recitals of the EU ETS proposal. Notwithstanding this clear political message, no binding requirements are introduced and the pass-through of the costs is left to the devices of the market instead.

“Applying the ‘polluter pays’ principle to shipping is critical for taking further efficiency measures and for the uptake of clean fuels in the sector. ECSA supports that the commercial operator should bear the costs of the EU ETS. The law should require the entity responsible for the decisions affecting the CO2 emissions of a ship to bear the costs arising from the implementation of the EU ETS in the context of a contractual agreement,” Sotiris Raptis, ECSA’s acting Secretary General, said.

European shipowners propose the introduction of a legally binding requirement in the articles of the EU ETS proposal. Such a requirement should provide for passing through the costs of the system from the shipping companies to the commercial operators in the context of a contractual agreement.

ECSA represents 19 national shipowners’ associations based in the EU and Norway. European shipowners control 39.5% of the global commercial fleet, contribute 149 billion euros per year to the EU GDP and provide 2 million people with careers both on board and ashore.