EU Parliament panel backs inclusion of shipping in EU carbon market

London — The European Parliament's environment committee July 7 voted in favour of bringing CO2 emissions from the shipping sector into the EU Emissions Trading System.

The move pre-empts a legislative proposal expected by the European Commission in 2021, but makes the expansion of the bloc's carbon market to include transport more likely.

"Today, we are sending a strong signal in line with the European Green Deal and the climate emergency: monitoring and reporting CO2 emissions is important, but statistics alone do not save a single gram of greenhouse gas," said Jutta Paulus, the committee's lead lawmaker on shipping emissions.

"That's why we are going further than the commission proposal and demanding tougher measures to reduce emissions from maritime shipping," she said in a statement.

Making shipping companies pay for their CO2 emissions would be expected to encourage the uptake of measures including energy efficiency improvements and cleaner fuels, including alternatives to fossil fuel-powered vessels.

The committee's vote is unusual, because it would normally follow a legislative proposal from the EC, and that is not expected until 2021. However, the vote was linked to existing EU legislation that deals with emissions monitoring and reporting requirements.

The EC has put forward a proposal to revise the EU system for monitoring, reporting and verifying CO2 emissions from the maritime sector and bring it in line with new obligations under the International Maritime Organisation to monitor emissions from 2019 and report in 2020.

In the legislative report approved July 7 -- by 62 votes to 3 against and 13 abstentions -- the committee voted to include ships of 5,000 gross tonnage and above in the EU ETS.

Lawmakers also said market-based emissions reduction policies are not enough and introduced binding requirements for shipping companies to reduce their annual average CO2 emissions per transport work, for all their ships, by at least 40% by 2030. That refers to tons of cargo per km travelled.

The committee also called for an "Ocean Fund" for the period from 2023 to 2030, financed by revenues from auctioning carbon allowances under the EU ETS. The fund would be used to make ships more energy efficient and to support investment in innovative technologies and infrastructure such as alternative fuels and green ports.

The full Parliament is expected to vote on the legislation at a plenary session in Strasbourg Sept. 14-17, the committee said.

Many aspects remain up for grabs, including the detailed rules that would define the scope of shipping emissions in the EU ETS, and rules governing the balance between free allocation and auctioning of allowances, as well as the proposed start date.

Maritime transport is the only sector with no specific EU commitments to reduce greenhouse gas emissions. Global shipping activity is estimated to emit about 2-3% of total global GHG emissions.

The EC is expected to propose in 2021 legislation to include shipping in the EU ETS, as part of the European Green Deal package.

To pass into law, the proposal would need the backing of the EU Parliament, EU member states and EC. Three-way talks between those institutions are set to start in the autumn.