Source: Hellenic Shipping News, 2021-08-23
A major European shipping trade body is among those lobbying against the EU’s proposed Paris Agreement-aligned net-zero pathway.
A report by London-based think tank InfluenceMap tracked 20 trade bodies’ efforts to lobby against the EU’s first batch of net-zero policies, the “Fit for 55” net-zero policy package proposed on July 2021.
The lowest score on support for the European Commission’s net-zero proposals was given to European Community Shipowners’ Associations (ECSA), which promotes the interests of 20 shipping associations across the EU, the UK, and Norway. According to InfluenceMap, the group has “actively lobbied to delay or weaken efforts” to include their sector in EU-level regulations on climate.
The second-lowest score was awarded to trade group Airlines for Europe (A4E), hinting at a wider transportation sector trend. “Industry associations representing transportation sectors are found to be the most misaligned with the EU Commission’s attempts to implement the Paris Agreement’s goals in their lobbying activities,” wrote the authors of the InfluenceMap report.
Both shipping companies and airlines operating in the bloc would need to start buying a meaningful level of emissions allowances for the first time under the proposed legislation, InfluenceMap said. Aviation had been largely exempted and shipping was free from any obligation to pay for allowances under the bloc-wide EU Emissions Trading System (EU ETS).
Shipping operators would be required to obtain EU ETS allowances for a portion of their emissions for intra-EU voyages starting in 2023, but they would ultimately need to obtain them for all emissions after a four-year phase-in period.
ESCA was found to have advocated against the maritime EU ETS in a 2021 EU consultation response, despite supporting a parallel policy that would put a price on carbon, the International Maritime Organisation’s stymied market-based mechanism.
Two Fit for 55 proposals would require airlines to blend into their fuel a specific quota of pricey low-carbon fuels and shipping companies to use fuels that produce fewer emissions (FuelEU Maritime).
Fit for 55 aligns with the bloc’s 55% GHG reduction target for 2030, which will put it on the path to net-zero by 2050. Now the EU’s legal obligation with the June adoption of the Climate Law, the policy package would increase EU ETS obligations for not only shipping and aviation, but also for industrial sectors.
While the transportation bodies have spurned an aggressive net-zero path, other industrial sectors also turned against it, InfluenceMap found. Despite affirming that net zero was necessary, a large proportion of industry bodies surveyed wanted to have their cake and eat it too by rejecting some of the actions assigned to their sector needed to reach the 2030 bloc-wide milestone.
Rejection of the EC’s programme was especially stiff from cross-sector business associations, and bodies in the refining, cement, automotive, and steel sectors.
Several cross-sector industry associations with members like BASF, Shell, and TotalEnergies were on the next-lowest rung.
Posing questions about strategy, some associations deemed the least supportive of net-zero policies had prominent members publishing net-zero targets, including Spanish oil major Repsol, which belongs to the ECSA. Repsol has said it is the first oil and gas company to set a net-zero goal.
Other companies targeting net-zero emissions but part of the groups lobbying against the EC plans included BASF (as part of International Federation of Industrial Energy Consumers) and TotalEnergies and Engie (as part of Mouvement des Entreprises de France).
Automakers fought the EU push for electrification of all passenger vehicles, seen as a cornerstone of the proposed EU package. The European Automobile Manufacturers Association (ACEA) lobbied against both strict electrification and for electric vehicle infrastructure.
However, the study found the power generation industry, which now includes renewable energy generators as well as utilities, was one sector that had embraced net-zero policy.
The Fit for 55 policy targets changing the shipping industry’s reliance on fossil fuel-based bunker fuel to a greater reliance on LNG or more experimentally, on biofuels, ammonia, hydrogen, methanol, and electrification.
Unlike its aviation sector demands, Fit For 55’s FuelEU Maritime policy would not require operators to use specific fuels, but it would require the use of fuels that reduce energy GHG intensity by 2% in 2025, 6% by 2030, and finally 75% by 2050. EU scenarios reveal a pivot towards using biofuels from forestry and increasingly from energy crops in the initial years.
The proposed policy will drive ships to fuel with biodiesel and LNG, which was deemed the cheapest compliance option for two decades in a report on the FuelEU Maritime draft law by green transportation campaign group T&E.
ESCA weighed in on the push towards biodiesel, raising the issue of the climate-unfriendliness of feedstocks typically grown by clearing forests that would otherwise be carbon sinks. In addition, concerns have been raised that not enough biofuel feedstock will be available to meet various sectors’ demand for biofuels under Fit for 55, such as airlines’ requirement for sustainable aviation fuel.
“Incentivizing the uptake of biofuel blends purchased outside the EU could create an enforcement minefield, putting at risk the achievement of emissions reductions. The principal obligation for compliance with any new standards should rest with the EU fuel suppliers,” ECSA Secretary-General Martin Dorsman said in a statement.
An added obligation of FuelEU Maritime is to run ships on electric power while they are berthed in ports from 2030. ECSA suggested that the responsibility to ensure there is electric power for ships in ports should lie with the infrastructure owners.
The international shipping industry is also raising a red flag on the carbon trading side of the proposals. “Other than as an ideological revenue raising exercise, which will greatly upset the EU’s trading partners, it’s difficult to see what extending the EU ETS to shipping will achieve towards reducing CO2, particularly as the proposal only covers about 7.5% of shipping’s global emissions. This could seriously put back climate negotiations for the remaining 92.5% of shipping emissions,” said Secretary General of the International Chamber of Shipping Guy Platten.
He is not the first to cry foul on how the expanded EU ETS impacts ships temporarily voyaging in international waters. “We know that non-EU states like Japan have already expressed concern over this diplomatic overreach and imposition of a unilateral and extra-territorial tax on trade,” said Platten.
Still more burdens are included in the proposals. IHS Markit analysts say that the revisions of the Energy Taxation Directive would also enshrine new minimum taxation levels in law for shipping and aviation fuels.
The new taxes for shipping fuels, required to be imposed by Member States, would be based on energy content rather than volume, and have the potential to inadvertently spur the practice of refuelling outside the EU, known as tankering, while also raising freight rates.