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Balancing European ambition to cut GHGs and shipping’s recovery.

Assessing the potential impacts on the shipping industry as Europe prioritises sustainability as it looks beyond COVID-19.

A European Recovery Plan and the first Annual Report on CO2 Emissions from Maritime Transport Report are expected to reinforce the need for unilateral European action on GHG emissions from ships, but what are the potential implications?

Recent disruption caused by the COVID 19 pandemic is cited as both an opportunity for decarbonisation – recover in a carbon neutral image – but also an impediment – recover to afford the luxury. However, the fundamentals behind decarbonisation remain: a necessary response to climate change and an opportunity for energy security for states reliant on fossil fuels.

It should come as no surprise that, in their crisis recovery planning, the European Commission is pursuing a more sustainable European economy. While it has noted the detrimental impact of COVID‑19 on the maritime sector, it has also recorded the attractive recovery opportunity offered by carbon pricing in that sector.

The European Commission has also published its first Annual Report on CO2 Emissions from Maritime Transport required by the EU Monitoring, Reporting and Verification (MRV) Regulation. There may be debate about the detail of the full report, as well as the completeness and reliability of the THETIS MRV data – particularly if used in the future as a baseline for carbon intensity reduction or the surrendering of emissions allowances – but headline emission figures from the report will reinforce the case for EU institutions to ensure that shipping is included in the European Climate Law and is subject to the ambition for carbon neutrality that will bind EU member states and institutions. It will also ensure that shipping is required to control emissions (via an upgraded EU MRV Regulation), pay for emissions (through the EU Emissions Trading Scheme (EU ETS)) and make the transition to sustainable alternative power (with Fuel EU Maritime) that the European trajectory for climate neutrality in 2050 and the EU Recovery Package may demand.

However, as the report itself records, ships calling at European ports in 2018 emitted circa 138 million tonnes of CO2. In 2015, shipping emitted more than 800 million tonnes worldwide, with updates for 2015 and data for more recent years to be provided by the Fourth IMO GHG Study unlikely to reduce that figure. That potential delta of at least 600 million tonnes of CO2 confirms that whilst Europe can make an exemplary contribution to decarbonisation in shipping, it will not be able to deliver it alone.

It remains to be seen how a reinforced ambition and a sustainable recovery in Europe will be translated into climate diplomacy without compromising the European intent or alienating the other states and an industry striving for recovery and sustainability.

The climate change imperative for decarbonisation has not changed. Neither has the need to sustain a global, collaborative policy and regulatory response to achieve real reductions in GHG emissions from ships. Caution is needed to ensure that unilateral ambition and recovery do not make the recovery of international shipping from the current crisis, or its future decarbonisation, more challenging than they are already expected to be.

For further information about these or any other upcoming regulatory changes, please contact your local LR office or visit www.lr.org/imo.

Here you will find various IMO Committee and Sub‑Committee meeting documents.

Visit www.lr.org/en/marine‑shipping/marine‑subscribe/ to subscribe to receive our bulletin with updates of IMO agendas, summary reports and our forthcoming IMO legislation document.

Horizons October 2020

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