On April 18, the European Parliament voted on a comprehensive reform of the EU Emissions Trading System (ETS), including the inclusion of the shipping and aviation industries in the ETS.
It is understood that the European Union had reached a preliminary agreement on the inclusion of the shipping industry in ETS at the end of 2022. In this formal vote, 500 votes were in favor, 131 votes against, and 11 abstentions.
According to the previous preliminary agreement, the shipping industry was included in the ETS, in the EU national ports of all 5000 gross tons and above ships, to 100 per cent of emissions payments; in the EU national ports and non-EU national ports between the 5000 gross tons and above ships, to 50 per cent of emissions payments.
the collection of this fee will be gradually advanced. Shipping companies will pay for 40 percent of emissions in 2024, 70 percent in 2025 and 100 percent in 2026.
For the aviation industry, by 2026, it will gradually eliminate the free quota and promote the use of sustainable aviation fuel.
ETS is a cap-and-trade scheme from which shipping companies buy emission allowances, one of which can emit one ton of carbon dioxide.
At the end of each year, shipping companies need to hand over enough allowances to cover the carbon emissions of their ships that year. Businesses that fail to comply may be denied access to EU ports until they have fulfilled their obligations. If the quota exceeds the requirements of the shipping company, it can be sold to other companies in need, or retained until the following year.
For the EU shipping industry into the emissions trading system, in the shipping industry has been a lot of controversy.
Maersk has publicly expressed support, believing that this will help reduce the price difference between fossil fuels and more expensive clean fuels.
, there are also some countries that believe that the EU's move has broken the multilateral framework widely supported by the international community. The implementation of emission reduction measures in a regional or single country will form a fragmented mechanism, which will adversely affect the convenience of transportation. The International Maritime Organization (IMO) should be used as a negotiation platform for the parties to formulate a global uniform implementation of greenhouse gas emission reduction measures.
In addition, the European Parliament also adopted the new EU Carbon Border Adjustment Mechanism (CBAM) rules with 487 votes in favor, 81 votes against and 75 abstentions. The new rules cover commodities such as iron, steel, cement, aluminium, fertilizers, electricity, hydrogen, and indirect emissions under certain conditions. Importers of these commodities must pay the price difference between the carbon price paid by the producing country and the price of carbon allowances in the EU carbon trading system.
CBAM will be phased in from 2026 to 2034, the first time climate regulation has been incorporated into global trade rules.
Source: Ningbo Shipping