Shipping Industry Calls for Exemption from Carbon Market Reform

Tim Rue/Bloomberg News

The global shipping industry has urged the European Union to drop the sector's inclusion in proposals adopted Feb. 15 to reform the bloc's carbon market, saying it risks distorting trade and international efforts to cut the sector's emissions.

About 90% of world trade is transported by sea, with shipping accounting for an estimated 2.2% of global carbon dioxide, or CO2, emissions and forecast to rise dramatically unless action is taken.

The draft reforms of the EU's carbon market post-2020 that were adopted by the European Parliament on Feb. 15 could result in emissions from the shipping sector being included in the bloc’s emissions trading system, or ETS, for the first time.

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But the International Chamber of Shipping, or ICS, which represents more than 80% of the world's merchant fleet, argued that efforts should be focused through the United Nations' shipping agency, the IMO.

"EU member states, which are also members of IMO, now have a duty to reject these unhelpful proposals," said Simon Bennett, director of policy and external relations at ICS.

"Trying to include thousands of small shipping companies — including thousands of companies not based in the EU — into a system designed for major EU power-generating companies and steel and cement producers will only complicate this reform."

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IMO has said that inclusion of emissions from ships in a European Union ETS significantly risks undermining efforts on a global level.

IMO Secretary General Kitack Lim said in January that such a move "could easily be the first step on a slippery slope towards fragmentation of the regulatory regime that controls global shipping"

Environmental campaigners, meanwhile, welcomed the European Parliament's stance.

Bill Hemmings, of the green lobby group Transport Environment, said that EU governments must support the draft reforms and the plan for ship CO2 emissions to be included in the ETS if IMO fails to act.

Last year IMO laid out a "road map" towards the adoption of final CO2 reduction commitments in 2023.