Including maritime transport emissions in the EU's greenhouse gas reduction

commitment

Addressing the reduction of greenhouse gas emission from global shipping should take

place through the International Maritime Organisation (IMO) and this will always be the ultimate goal of the EU. While energy efficiency requirements for certain categories of new ships have been set by the IMO through the energy efficiency design index (EEDI), no international regulation aiming to reduce GHG emissions from existing ships has been adopted to date. According to Directive 2009/29/EC (the revised EU ETS Directive) and Decision No 406/2009/EC (the Effort Sharing Decision), the EU should include the GHG emissions of the maritime sector in its 20% overall GHG reduction commitment in the event that no agreement including these emissions in reduction commitments has been reached at the international level by 31 December 2011. In order to decide how to proceed in developing such a proposal in 2012 and to have a clear understanding on the impact of these possible proposals, the European Commission wishes to supplement the input which it has received through 3 stakeholder meetings in the framework of the European Climate Change Programme and through the High Level Group on Shipping Emissions through this internet consultation.

The Commission is analysing the impact of policy options for a possible EU action. These policy options have been derived from the second IMO greenhouse gas study 2009 and the 2009 report on the technical support for European action to reducing greenhouse gas emissions from international maritime transport led by CE Delft. These policy options also take into account the progress made within the IMO, especially regarding the adoption of the EEDI. As presented during the third stakeholder meeting of the European Climate Change Program, the following policy options are considered for the purpose of the impact assessment:

- a compensation fund - an emission trading system (ETS) - a tax on fuel or on emissions - a mandatory emission reduction per ship

This consultation has been prepared by the Commission services for consultation purposes. It is addressed to stakeholders and experts in the field of shipping and climate change with a view to getting additional information on the shape of a possible

Commission proposal. It does not in any way prejudge, or constitute the announcement of, any position on the part of the Commission on the issues covered.

General context According to the Second IMO greenhouse gas study 2009, a range of technical and operational measures can already be implemented by the maritime sector to reduce their greenhouse gas emissions. Indeed, according to the IMO, the range of the maximum abatement potential of measures at negative cost, i.e. measures which are profitable even when CO2 emissions have no price, is 135 to 365Mt of CO2.

It has also to be recalled that the Council of the EU called for the global maritime sector to reduce emissions by 20% by 2020 compared to 2005 through global action and that the Commission considers that the GHG emissions from the EU shipping sector are to be reduced by 40% (50% if feasible) by 2050 compared to 2005.

Moreover, based on the work carried out by CE Delft for the Commission in 2009, it can be assumed that the CO2 emissions of shipping can be reduced by 27 to 47% by 2030 relative to a frozen technology scenario by implementing technical and operational measures. A major share of these emissions reductions, 23 to 45 percentage points, can be achieved at negative marginal abatement costs. The EU has reduced its greenhouse gas emissions by 380 MtCO2eq between 1990 and 2007 [1]. During the same period, global CO2 emission increased by 10GtCO2eq [2] and the CO2 emissions from international shipping have increased by 402Mt CO2eq [3]. For the international shipping sector, the baseline business-as-usual scenarios indicate projected CO2 emission growth in the range of 220-310% for the period 2007-2050[4].

Do you consider that the maritime sector should contribute to European emission

reduction efforts as other sectors?

(optional)

YesNo

Please substantiate your answer.

(optional) (maximum 1000 characters)

In accordance with article 191 paragraph 2 of the Treaty, any EU policy shall be

based on the "polluter pays" principle.

Heavily dependent on the scope of a possible system, potential revenues based on a

regional tax at a carbon price at 16.5 euro, or an emission trading system without

free allocation, 5.1 billion euro per year (considering traffic to and from EU ports,

310.6 MtCO2) [1]. These figures can be compared to the figures raised in 2010

Report of the UN Secretary-General’s High-level Advisory Group on Climate

Change Financing. Contribution of international maritime transportation to global

Equity and efficacy mean that all sectors must play a part. This particularly so for

shipping as its emissions will rise with world trade. The IMO has been mandated by

Kyoto to address international shipping emissions on a global basis but has

manifestly failed to do so after nearly 15 years. EU is acting to address emissions

from all other sectors and now is the time to propose a measure for EU shipping

which should take account of any developments at IMO and be designed in a way

that can develop into a global system. It should also incorporate global climate

finance objectives by allocating automatically at least 50% of revenues to the Green

Climate fund.

climate financing could be US$4-9 billion [2] (€4.2 - €6.3 billion) at a carbon price at

US$25 (€17.5), which correspond to the medium price scenarios (relating to intra-

OECD traffic, routes to and from non-Annex-I countries not being included).

[1] The CO2 emissions figures cover all traffic in 2006, also traffic that is not likely

to be covered by a possible regional proposal. If a regional system is pursued, it

would not necessarily cover all maritime emissions/ships and it could take a phased

approach. The estimates therefore provide a maximum, very rough EU-27 estimate of

potential revenues.

[2] The key input variables for the calculation are as follows:

Total emissions from international maritime activities: between 925 Mt and 1,058 Mt

in 2020 (from the International Maritime Organization, based on the

Intergovernmental Panel on Climate Change Special Report on Emissions Scenarios);

Share of revenues excluded due to incidence on developing countries: 30 per cent of

total based on value share of worldwide imports;

Share of revenues raised used for international climate finance: between 25 and 50

per cent of total revenues.

Do you consider that revenues should primarily be used to support investments to

reduce emissions in the maritime sector?

(optional)

YesNo

Do you consider that revenues should primarily be used for international climate

change finance? (optional)

YesNo

Do you consider that revenues should be use for other purposes? (optional)

YesNo

Please substantiate your answer.

(optional) (maximum 1000 characters; count: 0)

Definition of the scope

Routes covered

According to Climate and Energy Package, the primary issue to be addressed is

including international maritime emissions in the EU's reduction commitment. The

Commission would consider covering the emissions of ships from their last port of

call before calling to an in-scope port (i.e. all incoming routes) and those to the next

port of call after an in-scope (i.e. all departing routes). The compliance with EU

regulation will be set as a condition of entry to in-scope ports (possibly also including

ports in the EU overseas territories). For all of the possible policy options included in

the short-list (except for the taxation option based on fuel), the Commission would

consider setting the coverage of routes as follows:

For all vessels arriving at an in-scope port, all CO2 emissions for the journey

starting from the last port of call outside the scope of the measure to the first port

called at within the EU would be included.

For all vessels departing from an in-scope port, all CO2 emissions for the journey

starting from the departure port within the EU to the first port called at outside the

scope of the measure would be included.

All CO2 emissions from intra-EU journeys would be included in the scope of

policy coverage.

Do you think that routes related to search and rescue, fire fighting or humanitarian

operations authorised by the appropriate competent authority should be excluded from the scope ?

(optional)

YesNo

Do you think that routes performed exclusively for the purpose of scientific

research or for the purpose of checking, testing or certifying vessels or equipment

should be excluded from the scope ?

Revenues should be used for multiple purposes and in the following order of priority:

The first use in any regional scheme should be to compensate needy developing

countries for any economic impact of the measure. Secondly 50% of revenues

should be assigned to the Green Climate Fund for use in developing countries.

Thirdly some revenues could be recycled to promote efficiency and air emission

abatement measures in the industry. Fourthly, some revenues could be retained by

Member States.

(optional)

YesNo

Do you think that routes performed in the framework of public service obligations

in accordance Council Regulation (EEC) N°3577/92 of 7 December 1992 applying

the principle of freedom to provide services to maritime transport within Member

States (maritime cabotage) should be excluded from the scope ?

(optional)

YesNo

Do you think that routes performed from or to a Least Developed Country as

defined by the United Nations should be excluded from the scope ?

(optional)

YesNo

Do you consider that any other routes should be considered for exclusion ?

(optional)

YesNo

Please substantiate your answer.

(optional) (between 1 and 1000 characters; count: 0)

Exemptions for routes to LDCs make sense in principal however on closer analysis

we fear that such exemptions on the basis of route are fraught with difficulties and

could easily be a source of carbon leakage. Such exemptions should be investigated

by the Commission before any decision is taken but our own view is that such

exemptions are not feasible. Where there is a negative impact on LDCs (including

land-locked ones) or other needy developing countries, then the measure should

ensure compensation. This could be handled through the Green Climate Fund, or

some other mechanism but compensation should be additional to climate finance. For

similar reasons we do not support limiting the measure’s scope via routes or ship

types as a way of accounting for impacts on developing countries because we fear

that would either reduce any measure’s environmental impact or give rise to carbon

leakage problems. Again these issues should be studied first.

Do you have any other remarks on the routes covered?

YesNo (optional)

Type of ships covered

European policy action for controlling CO2 emissions from maritime transport could

be applied to all types of vessels or only some types of vessels, such as general cargo,

tankers, containers, bulk carriers, refrigerated ships, passenger ships, ferries, fishing

ships and military, customs or police ships.

Do you see reasons for excluding any particular ship category?

(optional)

YesNo

If yes, which one(s). Please substantiate your answer.

(optional) (maximum 1000 characters; count: 0)

We believe that any measure should cover all routes into and from EU ports to

maximise environmental effectiveness.

The Commission might consider ways to construct a scheme that includes a

provision for ‘equivalence’ similar to the aviation ETS. This might soften the

international impact of any measure and comprise a building block towards a global

scheme under IMO.

The administrative burden to include small emitters in the system could be

excessive therefore a de minimis ship size could be set at 400GT. But as per

later questions we believe large ships could be covered by a scheme such as

Fund/ETS whereas small ships of all types sailing in EU waters could be

covered by an intra-EU/small emitter specific upstream fuel tax. This would

include small craft and fishing vessels, tugs etc. We would need to be

convinced by research before agreeing to exempt any particular ship type

solely because some of these ships trade with LDCs as the potential for

leakage could be great.

Are there other categories than those mentioned above which should be included ?

(optional)

YesNo

Please substantiate your answer.

(optional) (maximum 1000 characters; count: 0)

Reliance on shipping

Do you consider that the reliance on shipping at a local or regional level should be

taken into account?

(optional)

YesNo

If yes, how should this be taken into account?

(optional) (maximum 1500 characters; count: 0)

Evasion / avoidance

The environmental effectiveness of any measure depends heavily on the level of

compliance and limiting the possibility for evasion. Compliance can be ensured with

a robust monitoring, reporting and verification system and clear enforcement policies

with deterrent and appropriate sanctions/penalties in the case of non-compliance.

However, for some policy options, such measures could also lead to a change of

traffic patterns.

Two cases of evasion/avoidance can be identified:

an additional port call is added to the route for the sole purpose of minimizing the

distance from the last port of call before arriving at an in-scope port or minimizing

the distance to the next port of call after leaving an in-scope port;

a ship could call at an out-scope port situated close to an in-scope port, and discharge

its cargo there. The cargo could then be transported by another mode of transport.

The whole journey would then fall outside of the scope of the policy action.

Theoretically, a similar approach could be applied for cargo exported.

Please provide us specific examples, analysis, data, etc. on this potential

issue. Please note that any additional study, example, analysis, etc. can be uploaded

or sent to clima-eccp-ships@ec.europa.eu (optional)

(maximum 1500 characters; count: 0)

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Policy options

As presented during the third stakeholder meeting of the European Climate Change Program, the following policy options are considered for the purpose of the

impact assessment:

- a compensation fund

- a mandatory emission reduction per ship

- an emission trading system (ETS)

- a tax on fuel or on emissions.

Compensation fund

An entity, called compensation fund, would take the responsibility of the emissions

of vessels which have contributed to this fund. The only obligation of a ship calling

into an in-scope port would be to produce a certificate mentioning its belonging to the

compensation fund approved by a public authority. If not, it will have to pay a

penalty. It can be recalled that any possible Commission proposal will be flag-

neutral.

Ship owners and operators contribute to the compensation fund as provided for in the

funds internal rules. A regional compensation fund could be established which could

serve as a precursor for a global measure of the same nature.

There are a number of ways to manage a compensation fund.

Who should manage a compensation fund? Please substantiate your answer.

(optional) (maximum 1000 characters; count: 0)

In order to give flexibility to the maritime sector and to build on existing partnerships

or cooperation, several compensation funds could be set up. On the other hand,

implementing several compensation funds might increase the administrative burden

for the public authorities who will be required to check compliance and reduce the

benefit of mutualisation among all actors.

Do you think that several compensation funds could be feasible?

(optional)

YesNo

Please substantiate your answer.

(optional) (maximum 1000 characters; count: 0)

We think the Fund is best managed by a public body but this will depend on that

body having the freedom to receive and allocate revenues directly to the Green Fund.

Additional oversight issues clearly arise if the Fund is privately managed and its

statutes would need to clearly specify how funds were to be used. It is possible that

third country objections might be even stronger if revenues were being received by a

non-government entity because of perceived concerns over whether the revenue was

being used fairly. Problems could arise both if there is and if there isn’t sufficient

flexibility in the constitution of the Fund regarding use of revenues e.g., switching

revenues between different uses, what to do if targets aren’t met etc. The Fund

however managed should report publicly in detail on its activities and results and be

publicly audited.

Option 1 : Contribution-based approach

Under this option, a contribution has to be paid for each ton of CO2 emitted falling

under the responsibility of the compensation fund. The level of the contribution is

driving the level of reduction. No ex-ante emission reduction target is set as such.

In order to be recognised by the EU, the compensation fund should set fees in

accordance with minimum levels. As the management entity of the compensation

fund would entirely be responsible of revenues collected, the public authorities would

have no control on the earmarking of these revenues. Therefore, in the event that

revenues are needed for international climate finance, a mandatory contribution to

international climate finance from the collected funds should be set as a criterion for

approval the compensation fund.

In order to limit its immediate impact and despite that all sectors should in principle

contribute to European emission reductions, the contribution may be required in

respect of only a proportion of the emissions only.

Do you consider that contributions to a compensation fund should, in the initial years

of a system, be limited? (optional)

Yes No

If you consider that contributions to a compensation fund should, in the initial years

of a system, be limited, should this contribution be initially reduced by reference to

contributing a percentage of a certain carbon price? (optional)

Yes No

If you consider that contributions to a compensation fund should, in the initial years

of a system, be limited, should this contribution be initially reduced by pre-set levels

of contribution in financial terms? (optional)

Yes No

The need for multiple Funds and any explanation as to why multiple funds would not

result in excessive administrative burden has not so far been demonstrated. Multiple

funds could also result in leakage or counterproductive competition (eg RORO

versus pax vessels) between funds. At this point we don’t understand the need for

multiple funds and the Commission itself has acknowledged that there could be

problems with ships switching between the Funds. If one of the reasons for multiple

funds is to recognise that different ship types have different abatement potentials it

would seem that that issue can also be taken account of within a single Fund.

In the event that revenues are needed for international climate finance, how long

should a transition take to full contribution (please specify a year)? (optional)

(between 2010 and 2050)

Option 2 : Target-based approach

An overall target based on historical transport performance or emissions would be set

and divided between individual compensation funds according to the emissions of the

ships they cover. Each compensation fund is free to reach its target in the most cost

effective way. Under this proposal, the emissions from the covered shipping entities

up to the level of the target are effectively grandfathered to those entities if no

additional contribution to international climate finance is foreseen. The polluter pays

principle should therefore be duly analysed under this proposal.

Each year, the achievement of the target will be assessed.

How can compliance be ensured?

(optional) (maximum 1000 characters; count: 0)

Given the large negative cost abatement potential in the shipping sector and the delay

that introducing any measure will entail, together with the fuel and corporate tax

exemptions that the sector enjoys, we believe that the full carbon price should be

applied to shipping from commencement of any measure. Under the situation where

the Fund contribution is dependent on both emissions and speed, a lower

contribution could be set corresponding to adherence to the target (reduced) speed.

Contributions would increase exponentially with speed.

Could be very problematic with some ships complying, many not. COM seems to

suggest that underperformance to target would be simply solved by drawing on each

ship’s bank guarantee and buying offsets to retire the excess emissions. In principle

we do not agree that shipping should have access to offsets given the negative cost

abatement potential in the sector. Linking Fund contributions to ship speed is much

more likely to achieve up front emissions reductions. Requiring ships to calculate

and have available publicly their efficiency will also bring commercial pressures to

bear to improve ship efficiency. This is currently absent. Recycling of revenues to

support abatement measures will have an impact but over a much longer time period

than COM thinks.

Evaluation of option 1 and option 2

Fully agree Partially

agree

Partially disagree Disagree

Do you consider that

option 1 could

achieve the emission

reduction required

effectively and

efficiently? (optional)

Partially agree

Do you consider that option

2 could achieve the

emission reduction required

effectively and efficiently ?

(optional)

Partially agree

Mandatory emission reductions per ship

A target corresponding to a mandatory emission reduction compared to historical

transport performance or emissions can be set for each ship calling into in-scope

ports. The mandatory emission reduction target can be set:

- as percentage of an historical baseline (option 1);

- in comparison with an index, such as the EEDI (option 2).

Evaluation of option 1 and option 2

Fully agree Partially

agree

Partially

disagree

Disagree

Do you consider that option 1

could achieve the emission

reduction required effectively

and efficiently?

(optional)

Partially agree

Do you consider that option

2 could achieve the emission

reduction required effectively

and efficiently?

(optional)

Partially agree

Please substantiate your answer.

(optional) (maximum 1000 characters; count: 0)

Do you consider that the target can be set on another basis?

(optional)

YesNo

Please substantiate your answer. (optional) (maximum 1000 characters; count: 0)

We don’t think that setting historical baselines is feasible as emissions are effectively

capped. If it could work it should be combined with target speeds which deliver the

required emissions reductions and rising penalties for exceeding speed

targets/emission reduction targets. Efficiency measures whether based on historical

baseline or EEDI should be public for all ships. Difficult to see how this measure

would work with ships that visit EU infrequently – other than that they slow down to

reduce their emissions! It would be very difficult to arrange that emissions meet the

exact target. Many ships will either exceed or fall short of the target. What is the

malus/bonus? Carry annual performance forward? Is fleet averaging allowed?

We would have expected a more developed proposal from COM being put to

consultation.

A mandatory ship-level emissions reductions could better be implemented as an

improvement of the efficiency relative to a baseline. So ships would have to

demonstrate that they have emitted [x%] less than what an average comparable ship

emitted in the geographical scope on a particular route in a base year. Average ship

speeds by ship type can be correlated with ship type/size. Reductions in average ship

speed can then be used as a proxy for emissions reductions. Ship speed limits or

target ship speeds corresponding to required emissions reductions can be set and

easily tracked/verified.

Mandatory emission reduction per ship ensure that a certain level of emissions

reduction. However, in such scheme, early movers can not be rewarded for their

efforts. Moreover, there is no incentive to go beyond this target.

Do you consider that a mechanism that rewards early movers should be

explored (optional)

YesNoNo opinion

If yes, what kind of mechanism could be implemented? (optional)

(maximum 1500 characters; count: 0)

Do you consider that a mechanism that creates incentives to go beyond the

mandatory emission reduction should be explored? (optional)

YesNoNo opinion

If yes, what kind of mechanism could be implemented? (optional)

(maximum 1500 characters; count: 0)

Emission trading system

The EU has an emissions trading system in operation since 2005, which covers

around 50% of European carbon dioxide emissions. Under an emissions trading

system, the environmental outcome is guaranteed, and the price of emission

A mandatory emission reduction target linked to speed would reward early movers as

the target speeds would reflect the average performance by ship type.

The most straightforward option is based on speed. Ships proceed at a target

(reduced) speed that delivers the required reductions. If ships sail below the target

speed they earn credits. Similarly if ships adopt abatement measures that reduce

emissions in addition to complying with target speeds then they can exceed the target

speed without penalty up to a set limit or earn additional credits.

allowances is determined by the market based on the level of efforts needed to make

the necessary reductions.

Ships would have to surrender emission allowances corresponding to their actual in-

scope emissions. Regarding the different options of monitoring and reporting, the

ship can either surrender the allowances once it has reported its emissions related to a

port call or surrender the allowances once a year according to the annual emissions

declared.

In order to limit its immediate economic impact, free allocation of allowances may be

given during a transitional period. If such free allocation were to be pursued, it may

be required that compliance is ensured through a third party, to avoid any

consideration related to the ownership of a vessel. Free allowances are valuable for

the ships, as they can be monetised.

Do you consider that financial support (either directly as free allowances or some of

the revenue generated from allowances) should be given during a transitional period?

(optional)

YesNo

If yes, and in the event that revenues are needed for international climate finance,

how long should a transition take?

(optional) (between 2010 and 2050)

The 2009 IMO Second GHG study mentioned that the shipping sector can implement

measures with significant negative abatement costs. Therefore, on the one hand, by

linking a maritime ETS with other sectors, the shipping sector could have a net

benefit of selling emission allowances to other sectors. On the other hand, in case

measures with positive abatement costs would have to be implemented in the

shipping sector, it may be more cost-effective for the shipping sector to buy emission

allowances from other sectors.

Should shipping be able to acquire emission reductions from other sectors? (optional)

YesNo

Should shipping be able to sell emission reductions to other sectors?

(optional)

YesNo

Please substantiate your answers (optional) (maximum 1000 characters; count: 0)

Do you consider that an ETS could achieve the emission reduction required

effectively and efficiently?

(optional)

Fully agree Partially agree Partially

disagree

Disagree

Please substantiate your answer (optional) (maximum 1000 characters; count: 0)

Tax

Tax on fuel

A tax would be levied when the fuel sold in the EU leaves the fuel supplier for

consumption. The level of the tax will trigger the emission reduction. The fuel

exported as cargo (including the fuel for offshore bunkering) would be exempted.

Access to offsets for the sector is a recipe for failure. Large negative abatement cost

opportunities persist but the sector is locked in a comfortable and easy cost-past-

through mindset. The sector should be given two alternatives: retrofit abatement

equipment or slow down (or both). Buying allowances from other sectors negates

any sectoral cap and converts allowance costs into yet another cost to pass through.

Giving other sectors access to shipping allowances will speed the transition and

increase pressure on the sector to act.

Need first to define emission reduction required. The White Paper target of 80%

emission reductions by 2050 refers to net reductions in Europe. We would say

preferably in-sector. This implies no access to CDM or offsets or access to

allowances outside the shipping sector. Other EU sectors could purchase credits from

the shipping sector. Even then, the problem is persistent cost pass through of

allowances costs to customers. ETS would be unlikely to trigger substantial in-sector

emissions reductions.

On one hand, the implementation of this option may be relatively simpler than other

options as it does not require monitoring of actual emissions. On the other hand,

applying a tax purely on bunker fuel sold in the EU could lead to a significant risk of

evasion and, may, as a result, undermine the environmental effectiveness and

economic efficiency of the fuel tax.

Do you consider that the evasion risk can be avoided when setting a tax on bunker

fuel?

(optional)

YesNo

If yes, what specific measures could be developed to avoid/reduce the risk of

evasion? (optional) (maximum 1500 characters; count: 0)

Do you consider that a tax on fuel could achieve the emission reduction required

effectively and efficiently?

(optional)

Fully agree Partially agree Partially

disagree

Disagree

All ships bunkering only at EU ports would be required to purchase only

taxed fuel unless they could demonstrate membership in the Compensation

Fund. The tax would be levied at the refinery level or within the supply chain

as per well established EU procedures for fuel tax. The ETD would need to be

revised but any ETD revision requires unanimity so this is not per se an

obstacle. At least 50% of revenues collected at Member State level would

need to be redistributed among the EU27 according to an agreed key and/or a

portion allocated to the Green Fund. Member States would need to agree to do

this without complication or delay. Such a tax would essentially be a tax on

intra-EU shipping and on small emitters. In this sense it could be very easy to

administer. As to effectiveness, the same problem exists with cost pass

through rather than triggering abatement action taking place.

Please substantiate your answer.

(optional) (maximum 1000 characters; count: 0)

Tax on emissions

A tax could be set on emissions monitored and reported. Regarding the different

options for monitoring and reporting, the ship can either pay the tax once it has

reported its emissions related to a port call or pay the tax once a year according to the

annual emissions declared.

Do you consider that a tax on emissions could achieve the emission reduction

required effectively and efficiently?

(optional)

Fully agree Partially agree Partially

disagree

Disagree

Please substantiate your answer (optional) (maximum 1000 characters; count: 0)

Choice of policy options

Which of these options for an EU proposal could be better to promote progress at the

IMO (rank from 1 (preferred) to 3) ?

The Commission currently seems disposed to exempt small emitters because of the

alleged administrative burden. This would be unnecessary, unfair, inequitable and

unacceptable. There is absolutely no justification for the current tax exemptions in

the ETD on aviation and shipping fuels. Policing a fuel tax on small emitters and

intra-EU ships would be straightforward. All ships involved only in intra EU trade

would be required to bunker taxed fuel unless they can demonstrate membership of

the Compensation Fund. Deep sea shipping would be required to join the Fund.

Fishing vessels should be included. Whether a tax I itself can trigger sufficient

emissions reductions is exactly the same question hanging over the efficacy of an

ETS or a levy or /Compensation fund

A tax on emissions is likely to have the same impact as an ETS and just as

administratively onerous. We are not sure that the required emission reductions will

be delivered given the apparent unresponsiveness of industry to previous fuel price

hikes as a driver of increased efficiency.

1 2 3 No opinion

Compensation

fund* (compulsor

y)

1

Mandatory emission

reduction per

ship* (compulsory)

3

Emission trading

system* (compulsory)

2

Tax* (compulsory) 4 (1 for

intra-EU

/small

emitters)

The Commission has identified criteria that could be taken into account for the

evaluation of possible EU measures. In order to help us assess the appropriateness of

this evaluation method, please indicate for each criterion the importance you attach to

it by ranking it from 1 (most relevant) to 5 (less relevant).

1 2 3 4 5 No opinion

Environmental

effectiveness

(ensure effective

emission reduction

in line with the 2°C

objective)(compuls

ory)

1

Maintain the

competiveness of the

EU* (compulsory)

Maintain

competitiveness of the

EU maritime sectors,

while giving them the

first mover advantage,

by providing

incentives to increase

fuel efficiency before

the rest of the world

adopt specific

measures* (compulsor

y)

Enforceability (Ensure

appropriate

monitoring, reporting

and verification while

keeping administrative

burden to the

minimum)

(compulsory)

2

Consistency with the

related EU policies*

(compulsory)

Vulnerability:

Exposure to/Risk of

evasion

(compulsory)

Timeliness

(Consistency with

timing of application

of measures and

interaction with policy

progress in

international

fora)* (compulsory)

Should other criteria be used? (optional)

YesNoNo opinion

Please substantiate your answer. (optional) (maximum 1000 characters; count: 0)

Regardless of the option proposed, should the maritime sector be in principle

authorized to use international credits (e.g. from the Clean Development Mechanism)

for its compliance ?

(optional)

YesNo

Should the maritime sector be authorized to use international credits subject to

quantitative and qualitative limits, along the same lines as for other sectors?

(optional)

YesNo

IN CASE OF YES

What are the reasons to authorize any type international credits?

(optional) (maximum 1000 characters; count: 0)

The measure needs not only to achieve an emissions reduction target but

achieve in-sector reductions. The measure needs to incentivise these and be

measurable. Any measure must deliver at least 50% revenues to the Green

Climate Fund and ensure impacts on LDCs are compensated. EU action must

take account of “progress” at IMO and be able to be integrated into an

eventual global measure.

There are no good reasons justifying access to international credits while there are

substantial negative abatement cost opportunities in-sector and given shipping’s

proven ability to pass on costs and continue on in a business-as-usual mode.. In

addition, allowing access to international offsets would risk that the maritime sector

losing sight of the need for it to implement substantial reduction efforts within the

sector first. If, despite all these arguments, access to international offsets were to be

granted, an ambitious mitigation commitment for own action by the maritime sector

would be needed firsts while international credits should only be allowed as

supplementary to that initial ambitious action. Moreover, given the negative

abatement cost-opportunities in the shipping sector and the current over-supply of

allowances in the carbon market, the shipping sector should not be allowed to

generate carbon credits through its abatement measures.

IN CASE OF NO

What kind of restriction (quantitative and qualitative) should apply on these

international credits?

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Action at EU level is now warranted as progress at IMO continues to be elusive.

Any EU proposal should take account of ongoing progress at IMO and be of a nature

that can be transformed into a global measure. In this sense EU action can act as a

catalyst for work at the IMO and provisions for the use of revenues can serve as a

model for wider action as well. The EU’s 2011 deadline for action at the IMO was

only set after years of waiting and effort; the two principal proposals for MBMs at

IMO were submitted after all by EU Parties. EU action on shipping has served as a

catalyst for international action on shipping before and a well-considered and

detailed proposal now from the Commission can advance the work before the IMO

by demonstrating in detail how measures can be designed, described, implemented

and enforced. Arguments put forward to keep waiting for the IMO may well not add

any momentum to that process and could in fact weaken efforts to accelerate IMO

action.

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There should be no access to international credits because of the reasons outlined

above. However, if access were to be granted, a thorough review of offset quality

must be conducted. Several studies have shown that many carbon credits from

existing CDM projects lack environmental integrity inter alia due to flawed crediting

rules and weak additionality testing. Moreover, many CDM projects have significant

social and environmental impacts. Lessons learnt must be taken into account in any

future decisions to allow offsets to new sectors including the maritime sector. Any

future decision on allowing access to international offsets must exclude substandard

carbon credits and must ensure that only credits with the highest environmental

integrity and strong sustainable development benefits can be used for compliance.

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