Some weeks ago, the European Parliament has voted to include shipping in the Emission Trading Scheme of the European Union (EU) – a decision which has not drawn a lot of attention yet, although it could change the industry more than most of us can imagine at the moment.
The vote does not mean that shipping will have to trade emissions at once from now on, as for example aviation has to do in the EU already for several years. But if it does have to in a few years’ time, it would mean a distortion of competition for liner shipping companys like Hapag-Lloyd to the benefit of Asian liner shipping companies, since the latter have less transport volume in the EU.
Captain Wolfram Guntermann, Director Environmental Management at Ship Management in Hamburg, explains the overall situation – and why Hapag-Lloyd favors a different approach which does not only better serve the industry but will be more sustainable for the environment.
Mr. Guntermann, what has the European Parliament (EP) decided, what are the next steps?
On February 15th 2017, the EP voted to include shipping in the EU Emission Trading Scheme (ETS). The goal is to mitigate CO2 emissions – the so called greenhouse gas emissions. The next steps of the process have to be approvals by the EU Commission and the EU Council consisting of the EU Member States.
What is the background of the decision of the EP?
There is a widespread political opinion among EU Bodies that the International Maritime Organization (IMO) is allegedly acting too slowly. The IMO as the specialized agency of the United Nations is responsible for safe and secure shipping and preventing marine and atmospheric pollution from ships.
As a result of this opinion, the EU MRV legislation (Monitoring, Reporting and Verification of greenhouse gas emissions) was already passed in 2015. This regional data collection system will commence as from next January for all vessels above 5000 GRT (e.g. all Hapag-Lloyd vessels). “It is noteworthy that EU MRV does not work on a global basis but affecting voyages within the EU or between EU Ports and the first or last port which is not located in the EU or EEZ”, explains Wolfram Guntermann.
In the wake of the EU MRV legislation, a political debate ensued whether shipping should be included in the already existing EU Emission trading system (ETS). The European Parliament’s Environment Committee agreed that emissions from ships should be included in the EU ETS from 2023, if the IMO does not deliver a further global measure to reduce greenhouse gas emissions for international shipping by 2021.
However, these measures were agreed by IMO Member States, including EU Member States, says Captain Guntermann: “This prompted IMO Secretary-General Kitack Lim to write to senior European officials expressing his concern that including shipping in the European Union’s Emission Trading Scheme (EU ETS) could undermine efforts to reduce greenhouse gas emissions from shipping on a global basis.”
But is the IMO not doing anything…?
No, in contrary. The 2015 Paris Agreement UNFCCC (United Nations Framework Convention on Climate Change) makes no reference to emissions from international shipping, because it is a global business and emissions from a ship cannot be accounted to a single state. But IMO’s efforts to address reduce greenhouse gas emissions from shipping have meanwhile reached an advanced stage.
“As the Secretary General stressed, IMO’s work on the control of these emissions shows that strong action is being taken”, says Guntermann: “IMO is continuing towards the goal of a fully global solution for international shipping, achieved through cooperation among all its Member States – again, including EU members.”
What’s the current status of the worldwide efforts to reduce greenhouse gas emissions in shipping?
Already in 2011, IMO became the first international body to adopt mandatory energy-efficiency measures for an entire industry sector with a suite of technical and operational requirements for new and existing vessels that entered into force in 2013.
In October 2016, IMO adopted a system for collecting data on ships’ fuel-oil consumption which will be mandatory and will apply globally. The global data collection will commence for all vessels above 5000 GRT as from January 2019.
This will be the first in a three-step approach leading to an informed decision on whether any further measures are needed to enhance energy efficiency and address reduce greenhouse gas emissions from international shipping. It is possible that policy options could be considered at a later stage. IMO also approved a “roadmap” for developing a comprehensive strategy on reduction of greenhouse gas emissions from ships, which foresees an initial emissions strategy being adopted in 2018.
What is the position of Hapag-Lloyd on the EP decision?
Captain Guntermann: “Hapag-Lloyd is not against reducing greenhouse gas emissions, quite the contrary! But as our business is globally, we do favor decisions which apply to all competitors in our industry worldwide. Therefore, we are concurring with the opinions expressed by various ship owners’ associations that the EP decision is setting the wrong course line. A regional system will not be suitable to mitigate global CO2 emissions as being pursued by the global solution of the IMO. The unilateral move by the EU is considered as counterproductive to the international efforts made.”
But what is our problem, what could be the impact of the EU Emission Trading Scheme (ETS)?
An ETS could be regarded as a quite unpredictable market measure: “It should be borne in mind that it will concern a vessel’s voyage between the last non EU and first EU port”, explains Guntermann. “This could prompt operators to avoid calling European ports, or, at least call non-European ports after a long distances trip. Following the Brexit, this could include UK ports and non EU ports in the Mediterranean.” Avoiding European ports will for sure have a negative impact on the port business. Plus: The future price for CO2 emissions is difficult to predict. “While we are talking about a current range of about five Euro per ton of CO2, there are political opinions expressed about increasing this price to 30 or even 50 Euro a ton. Burning one ton of HFO (Heavy Fuel Oil) emits 3.114 tons CO2.”
How does Hapag-Lloyd express concerns and work on remedial action?
Guntermann: “We do concur with the statement by IMO Secretary General Lim that unilateral or regional action that conflicts with or undermines actions that have been carefully considered and deliberated by the global community at IMO threatens world-wide confidence in the consistent, uniform system of regulation developed by IMO. Regional or unilateral action will harm the goals of the wider international community to mitigate global greenhouse gas emissions from ships and be at odds with the overarching objectives of the Paris Agreement.”
“We will continue our close support of leading Shipping Associations as the World Shipping Council (WSC), the Baltic and International Maritime Council (BIMCO), the European Community Shipowners’ Associations (ECSA) and the German shipowners’ association VDR (Verband Deutscher Reeder). This active involvement ranges as far as being member of the WSC Delegation at IMO and membership in various ECSA committees, the European Sustainable Shipping Forum, and with VDR.”
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Source: Hapag Lloyd
