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ECSA welcomes recognition of the shipping industry as a transitional sector in sustainable finance package

The European Commission adopted today a Sustainable Finance package with the aim of improving the flow of investments towards sustainable activities and hence using financial instruments to make Europe climate neutral by 2050. ECSA welcomes that the European shipping industry has been recognised under the Taxonomy as a transitional sector. However, ECSA emphasises that in order to drive a successful transition, it is vital that the technical screening criteria is realistic and technology neutral. 

ECSA welcomes that the shipping industry has been recognised as a transitional sector. “The European shipping industry is committed to achieve its decarbonisation and environmental objectives. At the same time, being a capital intensive industry where many vessels are one of a kind, it is also key to ensure access to innovative and sustainable solutions, which can drive the entire maritime industry towards a greener and more sustainable future. Hence transition financing is vital.” said Martin Dorsman, ECSA Secretary-General.

This Climate Delegated Act delivers the first set of technical criteria for defining which shipping activities contribute substantially to climate mitigation and adaptation, the first two of the six environmental objectives defined by the Taxonomy Regulation (Regulation (EU) 2020/852). ECSA warns, however, that the technical screening criteria for maritime transport in its current format, as defined by the Climate Delegated Act, is far too restrictive, which bears the risk of endangering the transition. As the Commission communication states, the EU Taxonomy does not currently define how activities other than green are to be treated.

In this light, ECSA welcomes the clarification from the European Commission that the EU Taxonomy Climate Delegated Act is a living document, which will be subject to regular necessary updates. “Besides the technical details, there are however principles that should be the building blocks when developing and updating the technical screening criteria.” added Martin Dorsman.

ECSA welcomes the Commission’s commitment to ensure  that the taxonomy remains science-based and technology neutral. Along this principle, European shipowners find it important that the technical screening criteria remains consistent along the entire supply chain, which needs further improvement. One example is the consistency between rules applicable for manufacturing of a vessel and the operation of the vessel. Furthermore, when seeking to  lower emissions and to improve on other environmental objectives, the shipping industry is not only dependent on other stakeholders (e.g. shipbuilders, engine manufacturers, the fuel supply chain, port infrastructure). It also has to be carefully assessed where the shipping industry has power to influence the transition due to their economic activities. Given that shipping’s economic activity is asset-based (the vessels) and that the cargo it carries is dependent on market demand and supply of stakeholders from other industrial sectors, considering cargo as part of the shipping maritime activity under the shipping taxonomy will lead to negative and unintended consequences. “It would be highly counterproductive and unfair to penalise financing for the shipping industry based on cargo carried.  In addition to driving away financing for innovative solution, it bears the  risk to accelerate an inefficient modal shift. With all this in mind, we are dedicated to provide expertise and will continue to work with the regulators on the technical details to ensure a smoother transition” emphasized Martin Dorsman.