The maritime industry is under increasing pressure to reduce carbon emissions, and the European Union’s Emissions Trading System (EU ETS) has emerged as a key mechanism in this effort. However, its implementation in the shipping sector has elicited mixed reactions, with stakeholders divided over whether it serves as an effective tool for decarbonisation or a financial burden. The recent Maritime Decarbonisation Europe conference, held in Amsterdam on 24-25 September 2024, brought together industry leaders to discuss the implications of the EU ETS. Their insights revealed a complex landscape of challenges, opportunities, and uncertainties surrounding the scheme.
Driving Decarbonisation
A central theme of the conference was the debate over whether the EU ETS is genuinely encouraging decarbonisation or simply adding costs for shipping companies. During a roundtable moderated by Bharat Nayar, Stolt Tankers’ business partner for sustainability and decarbonisation, participants expressed concern that the system feels more like a financial burden than a driver of environmental change. Nayar raised the issue of carbon leakage, where companies may shift operations to regions with less strict regulations, potentially undermining the EU’s competitiveness. This skepticism was shared by many attendees, who questioned the effectiveness of the funds collected through the system and whether they are being reinvested to support decarbonisation.
Global Factor’s international maritime manager, Miller Wells, pointed out that 2024 is a transitional year for the EU ETS, and many shipping companies are delaying significant action until 2025 when full compliance will be necessary. This cautious approach reflects uncertainty about the future of the system and its long-term impact on business strategies.
The Role of Ports in Decarbonisation
While shipping companies are hesitant, port authorities are positioning themselves as key players in the decarbonisation process. In a discussion led by Abhishek Nair, director of business development at PortXChange, ports were seen as potential catalysts for carbon reductions across the entire shipping supply chain. However, many port authorities expressed frustration over the lack of digital collaboration and limited control over how ships operate within their jurisdictions. Nair emphasized the need for greater coordination between departments and stronger collaboration with stakeholders to push decarbonisation efforts forward.
The Need for Greater Transparency in Carbon Pricing
One of the most pressing concerns raised at the conference was the need for greater transparency in carbon pricing under the EU ETS. During a roundtable moderated by Nicola Williams, OPIS director of shipping, participants highlighted the uncertainty surrounding the rising costs of carbon permits and how this will affect future operations. Without clearer mechanisms for forecasting and managing these costs, shipping companies are struggling to incorporate the system into their long-term financial planning. Williams stressed the importance of predictable pricing structures to help businesses adapt to the evolving regulatory environment.
LNG-Powered Vessels and Decarbonisation
The conference also focused on the role of LNG-powered vessels in reducing emissions. Pablo García, new projects director at Balearia, moderated a discussion that highlighted optimism about the short-term potential of LNG. However, the long-term viability of LNG, particularly synthetic and bio-LNG, remains uncertain. García suggested that while blending bio-LNG with fossil LNG could be a mid-term solution, synthetic LNG poses a significant challenge for the future.
The Expanding Scope of Compliance
The complexity of compliance strategies under the EU ETS is becoming increasingly apparent. In a roundtable led by Rachel Hoyland, counsel at Stephenson Harwood, participants discussed how the regulatory landscape is evolving to include a growing number of stakeholders, from fuel producers to technology providers. This broadening scope makes compliance more challenging but also highlights its importance. Hoyland noted that while the EU ETS is a critical step toward decarbonisation, a global equivalent, such as an International Maritime Organization (IMO) framework, is needed to harmonize regulations and create a level playing field.
A Complex Path Ahead for Shipping
The feedback from the Maritime Decarbonisation Europe conference underscored the complexity of the EU ETS and its impact on the shipping industry. While some stakeholders view the system as a necessary measure for reducing emissions, others remain focused on the costs and uncertainties it introduces. As the maritime sector continues to navigate the challenges of decarbonisation, the path to full adaptation to the EU ETS remains uncertain and filled with both opportunities and obstacles.
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Source: rivieramm.com
