Asian shipowners fire broadside at European emissions trading scheme (ETS) plans

Asian shipowners fire broadside at European ETS plans
Sam Chambers November 9, 2021 https://splash247.com/asian-shipowners-fire-broadside-at-european-ets-pl...

Further proof of the bitter fault lines emerging in the global green governance of shipping emerged today with an uncharacteristically strongly worded missive from the Asian Shipowners’ Association (ASA), hitting out at the European Union’s plan to include shipping in the bloc’s emissions trading scheme (ETS).

“As matter of principle, the Asian Shipowners’ Association strongly opposes any proposal for the unilateral or regional regulation of international shipping that may undermine the authority of the International Maritime Organization (IMO), which has been given responsibility by UNFCCC Parties for regulating the reduction of international shipping’s GHG emissions, as these emissions cannot be attributed to individual national economies,” the ASA stated today.

ASA argued that as the industry’s global regulator, IMO is the only appropriate forum for the development of a market-based measure (MBM) applicable to international shipping.

The Asian body said it is very concerned that the inclusion of shipping in the EU ETS is being taken forward with little apparent understanding of the implications for the ongoing negotiations at IMO to eliminate GHG emissions from the sector globally, or the wider ramifications for the EU’s relationships with its trading partners.

ASA said it believes the application of the EU ETS to non-EU flag ships is essentially an extraterritorial tax when the EU needs to encourage global trade, not create new barriers. Furthermore, ASA said that if the EU goes ahead with its ETS plans, other nations around the world might follow, applying their own carbon charges to international voyages, which originate or terminate at ports outside their territory, “creating chaos and fragmentation of the global maritime regulatory framework”, the ASA stated.

China, the US, Canada and the UK are all believed to be watching the EU’s ETS move closely with a view to possibly replicating similar measures in the coming years.

“Rather than incentivising the transition to zero-carbon technologies, the extension of the EU ETS to shipping will only serve to impede the process of decarbonisation of international shipping, putting the EU in conflict with the achievement of both IMO and UNFCCC climate change objectives, as the incorporation of shipping into the EU ETS will have profound implications for the future authority of IMO. This could potentially derail the concerted efforts by all IMO Member States, including European nations, to eliminate CO2 emissions from shipping completely,” the ASA argued.

ASA has come out in favour of the International Chamber of Shipping’s plan for an International Maritime Research Fund to drive innovation, paid for by a mandatory contribution on fuel used by ships, into technology the industry needs to cut carbon emissions, supported by a levy-based system linked to fuel consumption/CO₂ emissions, something it argues will be least likely to create unfair competition or distortion of global shipping markets.

Shipping is facing a big green regulatory month with COP26, the climate summit, underway in Glasgow and the IMO’s Marine Environment Protection Committee set to meet in a fortnight.

Despite facing plenty of criticism from international shipping bodies from around the world, the EU ETS has passed most voting hurdles and is likely to be adopted soon, splintering global green governance.

Rolf Habben Jansen, the CEO Hapag-Lloyd, speaking at the Shaping the Future of Shipping conference on the sidelines of COP26 in Glasgow over the weekend, told delegates: “We need to stop chasing all these illusions that everybody will have a completely level playing field and that there will be only one set of rules around the globe.”