EU action on reducing shipping emissions Lies Craeynest 18 April 2012

The problem with shipping Global shipping emissions are around 3 per cent of global emissions, equivalent to those of Germany. These emissions are projected to increase by 150–250 per cent by 2050 Furthermore, ships emit a number of other pollutants including SO2, particles and NOx. These pollutants - not covered by current climate policies - have complex by more short-lived warming and cooling effects on the atmosphere. Commission: EU emissions down 16% from 1990 levels in 2009 – by around 900 Mt; international maritime emissions up 400 Mt over the same period All sectors should contribute to emission reductions

Background to EU action on shipping According to revised EU ETS Directive (2009) and the Decision on Effort Sharing (2009): EU action if no international agreement by end 2011 In parallel, the Commission’s Transport White Paper of 28 March 2011 ‘considers’ as 2050 key goal: At least 40% cut in EU shipping emissions – 50% if feasible MEPC 63 did not give much confidence (EEDI technology resolution and impact assessment) But will there be a regional proposal? Politics very difficult Process: 2011: 3 stakeholder meetings, 3 high level meetings 2012: consultation (12 April), impact assessment, IA Board, inter- service consultation, proposal (Q3) 2013: Co-decision (Council and European Parliament)

EU 27 shipping emissions Global shipping emissions: around 1,000Mt (compared to aviation)

Europe shipping emissions Includes Norway, Greenland, Russia, Turkey

Oxfam’s approach In the absence of progress in IMO, we support the EU to proceed with legislation to reduce shipping emissions provided that: it is a building block towards a global scheme (through timeliness, reception by third countries, reflection discussion at IMO) The impact on developing countries is adequately addressed in the design of the scheme (through exclusion of certain categories of ships or through compensation) All revenues resulting from the scheme are used for climate action: 50% domestically and 50% internationally.

ECCP: What are possible purposes of any revenues from an EU scheme on shipping? Mitigation and adaptation? Support to vulnerable developing countries? Research and development – maritime focus? Support for reaching a global agreement? Support to maritime industry?  Facilitating shift to low-carbon/low-emitting technology?  Bringing new technology forward and into use?  Supporting e.g. fleet renewal, retrofitting incl. renewable energy generation/propulsion, alternative fuel infrastructure, port electrification, renewable energy generation in ports, climate adaptation of vessels

Why should an EU scheme bother about climate finance? Ensure that the regional scheme is a building block to a global scheme: Climate finance is central to this (AGF, WB report) Avoid political stand-off as with aviation: ensure the scheme cannot be perceived as a tax for treasuries Provide the first guaranteed flow of revenues to the Green Climate Fund Options that do not provide the option of climate finance should be discarded (eg tax, efficiency requirements without finance element)

How much can be raised? All revenues raised should be used to support climate action, 50% for domestic mitigation (within or outside of industry, any offsets to meet targets is domestic mitigation) and 50% as international climate finance The amounts for international climate finance that can be raised depend on: -The scope of the scheme -The level at which the carbon price/levy is set -% set aside for international climate finance -The legislative approach (ETS, levy, hybrid)

Based on CE Delft (2009) Scope* CO2 emissi ons Levy: 40 Euro/tonneLevy: 25 Euro/tonneLevy: 15 Euro/tonneLevy: 7 Euro/tonne Total50%30%2550%30%1550%30%750%30% MtMillion Euros Voyages arriving at EU ports 208 8,320 4,160 2,496 5,200 2,600 1,560 3,120 1, , Voyages departing from EU ports 214 8,560 4,280 2,568 5,350 2,675 1,605 3,210 1, , Voyages between EU ports 112 4,480 2,240 1,344 2,800 1, , Voyages arriving at or departing from EU ports ,400 6,200 3,720 7,750 3,875 2,325 4,650 2,325 1,395 2,170 1,

NGO meeting First joint meeting – shipping experts, development organisations Agreements: - we want a regional scheme - conditional support: impact on LDCs/SIDs, all revenues for climate action with 50% internationally, environmentally effective, no reason for offsets - joint letter to Hedegaard - some differences in emphasis

Design of the EU scheme Different options on the table -Emissions Trading -Tax on Emissions -Mandatory Compensation Fund/Industry-managed Compensation Fund -Mandatory emissions reductions Implications on environmental integrity and whether a mechanism can be created to set aside finance for climate finance Climate finance can be generated from both ETS and levy options

1. Inclusion of shipping into ETS Follow example of NER300 NER300 is a scheme set up to fund CCS and Renewable Energy Technologies with revenues from allowance auctioning under the revised ETS In shipping, the same could be done – 50% of allowances should not be redistributed to MS, but passed on to the Green Climate Fund for monetisation (by WB or EIB), and ultimately be used by the Fund. But politics with ETS difficult

2. Compensation Fund 2 options: EU-level Compensation fund (managed by authorities) and Industry managed Compensation Fund (managed by shipping industry). Industry needs to pay into a Fund a levy based on the CO2 they emitted on specific voyages. Option 1: EU-level compensation fund: this would be run the Commission, the EIB or another facility. 50% of revenues should be sent directly to the Green Climate Fund Option 2: Industry managed compensation fund: Industry would be encouraged (through legislation) to join a compensation fund, the objective and remit of which has been agreed in an ‘Environmental Agreement’ between the authorities and industry. The ‘Environmental Agreement’ should contain the provision that 50% of revenues from the industry’s compensation fund will be sent directly to the Green Climate Fund

Impact on third countries Cost increase of maritime transport as a % of GDP (allowance price of USD per tonne of CO2) (CE Delft) Joint Research Council Research over summer?

Scope

Types of ship (intra-EU)

Table X: Percentage of emissions by category and by scope of scheme Percentages for world emissions Percentages for EU arriving onlyPercentages for intra-EU Types FuelEmissionsFuelEmissionsFuelEmissions Container Tanker General Cargo Bulk carrier Reefers Ro-Ro Passenger Fishing Rest

Get involved Join EU MBM googlegroup Help gather intell on regional proposal Lobby nationally Outreach to developing countries