Shipping sector calls for further changes to EU ETS

Some of northern Europe's largest shipping trade associations today called for the EU to widen the scope of its emissions trading scheme (ETS) to reflect full-lifecycle emissions rather than combustion emissions alone.

In an open letter sent to the members of the European Parliament, European Council and European Commission, the signatories — Danish Shipping, the shipowners' associations of the Netherlands and Sweden, the Methanol Institute, the World Shipping Council and the Renewable Hydrogen Coalition — called for political commitment to provide certainty on the requirements of future green fuels so large-scale, long-term investment in production of green fuels can be achieved.

Shipping will be incorporated into the EU ETS from 2023, but in its current form will only require shipowners to pay for emissions on a tank-to-wake, or combustion basis, rather than on a well-to-wake, or lifecycle basis. The signatories said that only counting tank-to-wake emissions limits the incentive to use Renewable Fuels of Non-Biological Origin (RFNBOs), also known as e-fuels, such as e-methanol or e-ammonia, that are widely seen as a critical element for the shipping industry if is to reach net zero by 2050.

In some cases, the production process for RFNBOs can offset the emissions from combustion. When produced in this way, RFNBOs avoid an additional release of greenhouse gas (GHG) emissions, when compared with fossil fuels, the open letter states, but would not be considered in the ETS' current configuration. The group point out the existing proposal could encourage use of fuels that emit zero emissions at combustion but have high production emissions, such as fossil-fuel derived ammonia.

According to the letter, the ETS is not adapted to reward zero-emissions along the fuel production chain, something that could be addressed through a lifecycle approach.

Danish Shipping has previously called for more work to be done to EU shipping policy, the two pillars of which — FuelEU Maritime and the ETS — it sees as interacting poorly, while the World Shipping Council in June called for the removal of a clause in the ETS legislation that "presents a loophole to shield shipowners" from the costs associated with the policy.

By Jonah Sweeney