European Shipowners see earmarking of ETS revenues as a first step, but more work is needed to deliver on competitiveness

The European Commission has published today the new EU ETS proposal. European Shipowners welcome the earmarking of ETS revenues at EU and national level, as well as the support for the uptake and availability of sustainable fuels - a long-awaited and important step in the right direction. The simplification of reporting requirements is equally positive, as an essential step towards reducing unnecessary administrative burden. The proposal also ensures a level playing field for European offshore operators.

However, the proposal fails to sufficiently support energy efficiency projects and the uptake of clean technologies, falling short of supporting the full spectrum of technologies set out in the Commission proposal on the Industrial Accelerator Act.

The derogations for small islands, ice-class ships, and outermost regions are only extended to 2035, rather than for the full operational period of the system. Furthermore, any proposal to support the competitiveness of EU ports must ensure the integrity of the system and maintain the level playing field among all segments of shipping.

The proposal makes progress regarding the IMO process, committing to avoid double payments should an international agreement be reached. However, it stops short of sending a strong signal to our international partners that the EU ETS will be withdrawn once an IMO agreement is adopted.

"Today, the Commission has taken a first step to earmark ETS revenues at EU and national level. Support for sustainable fuels is welcome and necessary to make them available at European and global level. In this regard, support for the availability of fuels in third countries is encouraging.

However, the proposal fails to deliver on the uptake of clean technologies, limiting support to wind and electricity alone. Technologies that can quickly improve energy efficiency and deliver immediate emission savings are left without support.

On the IMO process, progress has been made with the commitment to avoid double payments. However, a clear signal to the international community that the ETS will be withdrawn once a global agreement is reached is still missing.

We would like to thank the services of DG CLIMA and DG MOVE for the constructive dialogue over the last months, and we look forward to contributing to the legislative process in the European Parliament and the Council" said Sotiris Raptis, Secretary General of European Shipowners|ECSA.

What works:

• ETS Revenues: The proposal takes an important step forward by earmarking revenues at EU and national level. 110 million allowances are earmarked for the shipping sector, amounting to approximately EUR 10 billion. At national level, 50% of Member States' ETS revenues are earmarked, with shipping decarbonisation among the priority purposes.
• Support for fuels: The support for sustainable fuels is a strong positive signal. These fuels are on average four times more expensive than conventional fuels, and meaningful support for their uptake is essential to create a business case for investment. We welcome that fuels produced in Europe and in certain third countries are eligible for support.
• Reporting requirements and Offshore: Simplification of reporting requirements between the EU ETS and FuelEU Maritime will reduce administrative burden for shipping companies. The proposal also ensures a level playing field for EU-based offshore operators.

What doesn't work:

• Clean technologies: The proposal provides a very narrow list of eligible technologies. This list should cover the full range of energy efficiency projects that can deliver immediate emission savings across the existing fleet, as well as the new technologies necessary for the deployment of clean fuels.
• Derogations: The derogations for islands, outermost regions and ice-class vessels are only extended to 2035. To safeguard the connectivity of Europe's most vulnerable regions, the derogations should be extended and be made automatic, permanent and fit for purpose.
• EU port competitiveness: Any proposal to support the competitiveness of EU ports must ensure the integrity of the system and must maintain the level playing field among all segments of shipping.

What must be improved:

• More support from ETS revenues: The allocation of 110 million allowances is only a start: it amounts to approximately EUR 10 billion out of the EUR 90 billion that the sector is expected to pay into the system between 2030 and 2040. The full potential of the revenues generated by shipping must be used for the energy transition of the sector.
• IMO process: The proposal addresses only double payments in relation to a future IMO global agreement. This falls short of what is needed: a strong review clause under which the EU measures are reviewed and withdrawn once a global agreement is adopted at the IMO.

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