The World Shipping Council has expressed serious concerns for maritime trade and global efforts to reduce greenhouse gas emissions (GHG) if the EU expands its Emissions Trading System (ETS) to include international shipping.
In a paper published this week, the WCS points out that the EU ETS has been described as a “regional” system, but bringing international shipping into that system using the Monitoring, Reporting and Verification (MRV) scope would regulate the operation of ships on several of the world’s seas and oceans, including on the high seas and in waters adjacent to non-EU nations.
“This question of the geographic scope of any ETS system for shipping must be addressed before the European Commission can turn to the many technical details that would be involved in creating such a system,” says WSC president and CEO John Butler. “If the current MRV geographic scope is used, a majority of the emissions covered by the system would occur outside EU waters, in many cases from voyages extending thousands of miles across the globe. The cargo concerned is not just EU imports and exports; it is also the imports and exports of the EU’s trading partners.”
He believes this will create trade tensions and raise legal and diplomatic concerns about the geographic reach of a unilaterally imposed emissions charge. “The EU would be well advised to avoid extraterritorial application of the ETS,” he says.
“If the geographic scope is the same as the MRV GHG reporting regime, the system would also cover significant cargo volumes that are not part of EU trade at all, but are transhipped through EU ports. This would include numerous less-developed countries (LDCs) that would face an extra charge on their trade simply because their goods are routed through the EU. A charge would be levied first on the cargo as it sails into an EU port and then again as the same cargo leaves the EU on another vessel to its ultimate destination.”