News / ICS uses China opening to slam EU ETS aimed at shipping

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This week, ICS used the launch of its new office in Shanghai to criticise the incoming EU Emissions Trading Scheme (ETS) and its application to shipping.

Simon Bennett, ICS deputy secretary general, on the podium in front of Chinese audiences, stressed “the importance” of “a legal framework in maritime transport”, and underlined the “challenges and risks from other unilateral regulations”, according to Shanghai’s Yicai.

The EU ETS is set to come into force in January 2024, applying to vessels over 5,000GT, mandating that they must record and “surrender” their greenhouse gas emissions data.

However, ICS members are unhappy with this arrangement.

“We continue to have concerns that the application of unilateral and regional schemes such as the ETS will not reduce global emissions to the extent required,” ICS’s director of strategy and communications, Stuart Neil, told The Loadstar.

“This is why the ICS called for IMO member states to increase the ambition of their greenhouse gas reduction strategy in line with a net zero emissions trajectory by 2050.”

ICS said its own proposals for a global scheme, “…such as the Fund & Reward proposal”, would be preferable to “regional applications of market-based measures such as the EU ETS”, which, Mr Neil said would apply to just 7.5% of ship emissions.

F&R would “ensure a level playing field and enable a global industry such as shipping to deliver a more sustainable industry and send a strong market signal to fuel producers,” he added.

The outcome of this year’s MEPC 80 was a watering-down of IMO targets to the point where they are now described instead as “indicative checkpoints”, which made more aggressive regional legislation inevitable.

“ICS has put forward its own versions of a shipping carbon levy, but quite often these have not covered important details such as the lifecycle of fuels,” said environmentalist Aoife O’Leary, head of Opportunity Green. “Hopefully there is such a levy – but it will depend on what happens to the revenues as to whether it renders the ETS unnecessary.

“In an ideal world, the IMO would step up and put in global regulations, but it hasn’t yet. What we have is a revised initial strategy with targets that are not quite 1.5… better than they were, but we still don’t have measures to put them in place.”

Ms O’Leary remains unconvinced that additional taxes on shipping will drastically affect the price of goods. She said: “A lot of countries really need climate finance and, because shipping has barely paid any taxes, they are the perfect place to get it.

“Shipping is so cheap – it is not only the most efficient, but it is so much cheaper to put something on a ship than on the road. The carbon price you would have to have to make it worthwhile for you to drive from Shanghai to Rotterdam instead of shipping, would be astronomical.

“Ultimately, shipping is a very small proportion of the cost of goods… freight rates during the pandemic were much higher than what a carbon price will add to shipping, and we did not see ICS coming out in protest against that.”