Red tape and emissions trading: ETS hits non-EU shipowners hard
Asian shipowners are likely to be hit the hardest by the cost of the EU ...
MSC CEO Soren Toft believes the economy will remain globalised, but Africa will play a much more prominent role as the world transitions to more sustainable fuels.
At a Paris conference panel discussion, “Charting a new economy”, Mr Toft told delegates: “The future economy will still be globalised, even if some supply chains are a little more distributed.
“Although Asia remains the world’s manufacturing hub, within a couple of decades Africa will play a greater role in production for the world.”
With that shift, he said, would also come the challenge to transition to clean energy, which will also carry costs.
But Mr Toft explained MSC’s strategy that, he says, will achieve net-zero emissions by 2050, initially “by improving efficiency and moving on to lower-carbon transition fuels, such as biofuels and LNG (liquefied natural gas). Then, as soon as possible, by tapping net-zero alternative fuels when they become available at scale.”
Despite the limited progress made at the recent IMO Maritime Environment Protection Committee this month, which saw approval to develop voluntary agreements between ports and carriers to reduce emissions, and the agreement for IMO member states to produce voluntary action plans, the push for decarbonisation is intensifying and it will be an increasingly tough challenge for carriers.
Typically, the EU has led the maritime decarbonisation debate and this month also saw the European council and parliament reach a provisional agreement on the EU Emissions Trading System (EU ETS).
Marian Jurečka, the Czech minister for environment, said: “The agreement on the EU ETS and the Social Climate Fund is a victory for the climate and for European climate policy. This will allow us to meet climate objectives within the main sectors of the economy.”
The agreement is provisional while both the council and parliament formally adopt the measures, from January 2024, carriers heading to and from the EU will pay a carbon levy, estimated by MSC at €9 per teu.
On Sunday, the EU said: “The council and parliament agreed to include maritime shipping emissions within the scope of the EU ETS. They agreed on a gradual introduction of obligations for shipping companies to surrender allowances – 40% for verified emissions from 2024, 70% for 2025 and 100% for 2026.”
Crucially, the council and parliament agreed to include non-carbon greenhouse gas emissions, including nitrous oxides and methane, in the monitoring reporting and verification rules from 2024 and in the ETS by 2026.
For MSC and other carriers that have ordered LNG-powered ships, the inclusion of the fuel – the chief emitter of methane – in the ETS will see the cost of operating these vessels increase substantially from 2026.