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Cyprus Shipping Chamber welcomes the provisional agreement on EU emissions trading for shipping

The Cyprus Shipping Chamber welcomes the outcome of the trilogue negotiation, on 29 November 2022, on the inclusion of the shipping sector in the EU ETS. We are pleased to note that the EU institutions have embraced a number of positions promoted by the shipping industry, which will assist in the shipping’s decarbonisation through a more pragmatic and realistic implementation of the EU ETS for shipping.

The Chamber particularly welcomes the agreement on mandatory dedicated calls for maritime under the Innovation Fund and the earmarking of at least 20 million ETS allowances for maritime under the ETS Innovation Fund up to 2030. The 20 million ETS allowances under the current prices correspond to around 1.5 billion euro. Dedicated support to shipping through the Innovation Fund is key to bridging the price gap with clean fuels, improving the energy efficiency of ships, fostering innovation and building the infrastructure in ports.

The shipping industry will not be able to tackle the major task of decarbonisation alone. All stakeholders must be on board. The Chamber therefore also welcomes the recognition of the “polluter-pays principle” through mandatory requirements for the pass-through of the EU ETS costs to the commercial operators of the vessels.

The phase-in period and the gradual inclusion of emissions from shipping over a three-year period from 2024-2026 is also important to ensure a smooth transition for the sector.

On the Scope of the EU ETS, the Chamber always advocated that that vessels below 5000gt should also contribute in the decarbonisation effort of our industry and thus welcomes the fact that from 2025, general cargo ships and offshore vessels between 400gt and 5000gt will be covered by the EU MRV and by end of 2026, the Commission will present a report on the possibility to include them in the EU ETS.

The Chamber considers that the derogation for voyages performed in the framework of a transnational public service contract or a transnational public service obligation is a positive development for Cyprus, being an island away from mainland Europe without a land connection.

The Chamber’s strong belief of course is that an international market-based measure within the framework of the International Maritime Organization (IMO) would be more effective and therefore considers that the inclusion of a clause asking the Commission within 18 months after the adoption of an IMO measure and before it becomes operational, to present a report examining the global market-based measure and the coherence between the EU ETS and the IMO measure, is crucial.

The trilogue agreement on shipping will be subject to an overall agreement for all ETS sectors, expected to be achieved in the last trilogue meeting on 15-16 December 2022.

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