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Maggie Johnson

Cutting Emissions in the Shipping Industry

Maritime transport is crucial to the EU economy and stands as one of the most energy-efficient transport modes, but it is also a large and growing source of greenhouse gas emissions. In 2018, global shipping emissions accounted for 1,076 million tonnes of CO2, representing around 2.9% of global emissions caused by human activities. Projections indicate that emissions could increase by up to 130% of 2008 levels by 2050. If the climate change impact of shipping continues to grow as projected, it would undermine the Paris Agreement's objectives, which aim to keep global warming well below 2°C and strive to limit it to 1.5°C.

In the EU, maritime transport represented 3 to 4% of total CO2 emissions in 2021, amounting to over 124 million tonnes of CO2. Effective global measures are needed to reduce emissions from international shipping significantly. In July 2023, the International Maritime Organisation (IMO) set new targets for greenhouse gas reductions and committed to adopting a basket of measures by 2025 to achieve these targets. The coming years will determine the effectiveness of these measures in meeting the targets and the goals of the Paris Agreement. The EU's actions, such as integrating maritime transport into its Emissions Trading System (ETS), are crucial for encouraging reductions. This integration means that ships will be required to purchase and surrender EU ETS allowances for each tonne of CO2 (or equivalent) emissions within the scope of the system, thereby creating a financial incentive for emissions reduction.

Since January 2024, the EU’s ETS has expanded to include CO2 emissions from all large ships (5,000 gross tonnage and above) when entering EU ports, regardless of their flag. The system covers 50% of emissions from voyages beginning or ending outside of the EU and 100% of emissions occurring between two EU ports or within EU ports. The ETS includes CO2, CH4 (methane), and N2O (nitrous oxide) emissions, with the latter two being covered from 2026. Maritime emissions are included in the overall ETS cap, which limits the total greenhouse gas emissions allowed. The cap is gradually reduced to ensure that all sectors contribute to the EU’s climate objectives, promoting energy efficiency and low-carbon solutions.

Shipping companies must purchase and surrender EU ETS allowances for each tonne of CO2 (or equivalent) emissions within the scope of the system. Compliance is monitored by the authorities of EU member states, using rules similar to those for other sectors. Initially, companies will only need to surrender allowances for a portion of their emissions, with the percentage increasing each year: 40% of emissions in 2025, 70% in 2026, and 100% from 2027 onwards. The first surrendering deadline will be in September 2025 for emissions reported in 2024.

The system includes monitoring, reporting, and review clauses to ensure proper implementation to track progress and adjust rules as necessary. This includes provisions for shipping companies to report aggregated emissions data, with verification by accredited verifiers. The relevant legal texts were adopted in May 2023 and came into effect in June 2023, with additional implementing and delegated acts to define specific rules. These acts cover various aspects, such as the administration of shipping companies, monitoring greenhouse gas emissions, and the identification of specific ports. The process of monitoring and reporting emissions data by shipping companies involves regular reporting of their emissions to the authorities, who then verify the accuracy of the reported data. This process ensures that companies are held accountable for their emissions and encourages them to take measures to reduce their carbon footprint.

As part of the EU Green Deal and the "Fit for 55" initiative, the European Commission put forward a variety of measures to address maritime transport's climate impact, including the extension of the ETS. These measures include the FuelEU Maritime Regulation, which aims to reduce the greenhouse gas content of energy used by ships, and the revision of the Renewable Energy Directive seeks to enhance the proportion of renewable energy. Other initiatives focus on improving energy efficiency and promoting the use of low-carbon and renewable fuels, while supporting research and innovation to decarbonize maritime transport.

On the global stage, the IMO has been working on a strategy to reduce greenhouse gas emissions from shipping. In 2023, the IMO revised its greenhouse gas reduction strategy, setting a target of net-zero emissions by 2050, with intermediate goals of reducing emissions by 20-30% by 2030 and 70-80% by 2040, compared to 2008 levels. The IMO also aims for at least 5% uptake of zero-emission technologies by 2030. These ambitious targets will be supported by additional measures, including a global standard for reducing marine fuels' greenhouse gas intensity and the introduction of a maritime emissions pricing mechanism. The EU, as a major player in the global maritime industry, is actively supporting these global efforts. It is contributing funding to projects promoting low-carbon technologies in developing regions and is committed to implementing measures, such as the extension of the ETS, to reduce the industry's climate impact.


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