With the European Commission announcing earlier this year an increased climate target for 2030 and aiming to extend the EU’s Emission Trading System (EU ETS) to the shipping sector, the Cyprus Shipping Deputy Ministry organised a Virtual Debate entitled “ETS in Shipping: Elixir or Threat to Sustainability?”, on 7 December 2020, together with the Ministry of Agriculture, Rural Development and Environment and the European Parliament Office in Cyprus. The discussion was held between Regulators, Shipowners and NGOs, including the Shipping Chamber’s President and ECSA (European Community Shipowners’ Associations) Vice-President, Mr. Philippos Philis in his personal corporate capacity as Chairman and CEO of Lemissoler Navigation Co. Ltd.

Through this pioneering initiative, Cyprus as a leading maritime center, addressed this crucial topic by exploring potential advantages and implications that may arise from the application of the EU’s Emission Trading System to maritime transport, aiming to contribute to the relevant legal revision regarding the EU’s Emissions Trading Scheme, ahead of the European Commission’s open public consultations.

As a summary of a very constructive discussion, the following concluding remarks were highlighted:

1. It is uncertain that an EU ETS will be effective in further reducing GHG emissions from ships beyond what the International Maritime Organisation (IMO) is regulating. The EU system will certainly lead to carbon leakage. The IMO is the only body that can effectively regulate and achieve emissions reductions from shipping.
2. An EU ETS will affect the viability of shipping Small and Medium sized Enterprises (SMEs), which form the backbone of EU shipping, by adding to their administrative and budgetary requirements and forcing cargo back to more polluting transport means ashore.
3. Any system introduced by the EU must be IMO compatible and scalable in the future, but even better the EU should cooperation with the IMO to introduce a global system.

Taking above insight into account, the Shipping Chamber highlights the risk of undermining IMO negotiations to implement the Initial IMO Strategy, so setting back global efforts made so far to adopt measures for absolute emissions reduction from ships.