Reducing GHG from international shipping – a European perspective

European Commission: 1

Reducing GHG from international shipping – a Reducing GHG from international shipping – a European perspectiveEuropean perspective

Shipping and the Environment: GHG Emissions from Ships

2Oth May 2009Limassol

Mark Major European Commission

DG Environment


StructureStructure

1.1. EU positionEU position

2.2. UNFCCC processUNFCCC process

3.3. IMO ProcessIMO Process

4.4. EU action on transport GHGEU action on transport GHG

5.5. Aviation and EU-ETSAviation and EU-ETS

6.6. Preparation of EC measuresPreparation of EC measures

7.7. ConclusionsConclusions


Environment Council Conclusions Environment Council Conclusions

IS CONCERNED that emissions from IS CONCERNED that emissions from international aviation and maritime transport international aviation and maritime transport represent growing sources of greenhouse gas represent growing sources of greenhouse gas emissions – October 2007emissions – October 2007

CALLS UPON all Parties to agree CALLS UPON all Parties to agree clear, clear, meaningful targets also for these sectorsmeaningful targets also for these sectors within within the framework of a future global climate the framework of a future global climate agreement for the post-2012 period - October agreement for the post-2012 period - October 20072007


‘‘Climate and Energy’ Directives Climate and Energy’ Directives (December 2008)(December 2008)

The European Council has made a firm commitment to The European Council has made a firm commitment to reduce the overall greenhouse gas emissions of the reduce the overall greenhouse gas emissions of the Community by Community by at least 20% below 1990 levels by 2020at least 20% below 1990 levels by 2020, and , and by 30% provided that other developed countries commit by 30% provided that other developed countries commit themselves to comparable emission reductions themselves to comparable emission reductions

By 2050, global greenhouse gas emissions should be By 2050, global greenhouse gas emissions should be reduced by reduced by at least 50% below their 1990 levels.at least 50% below their 1990 levels.


‘‘Climate and Energy’ Directives Climate and Energy’ Directives (December 2008)(December 2008)

All sectors of the economy should contribute to All sectors of the economy should contribute to achieving these emission reductions, achieving these emission reductions, including including international maritime shippinginternational maritime shipping and aviation. and aviation.

Aviation is contributing to these reductions through Aviation is contributing to these reductions through its inclusion in the Community scheme.its inclusion in the Community scheme.


‘‘Climate and Energy’ Directives Climate and Energy’ Directives (December 2008) (December 2008)

In the event that no international agreement including international maritime In the event that no international agreement including international maritime emissions in its reduction targets through the IMO has been approved by the emissions in its reduction targets through the IMO has been approved by the Member States and/or no such agreement through the UNFCCC has been Member States and/or no such agreement through the UNFCCC has been approved by the Community approved by the Community by 31 December 2011by 31 December 2011, the Commission should , the Commission should make a proposal to include international maritime emissions according to make a proposal to include international maritime emissions according to harmonised modalities in the Community reduction commitment harmonised modalities in the Community reduction commitment with the aim of with the aim of its entry into force by 2013its entry into force by 2013. Such proposal should minimise any negative impact . Such proposal should minimise any negative impact on EU competitiveness, taking into account the potential environmental benefits on EU competitiveness, taking into account the potential environmental benefits

IMO should agree measures in 2010, adopt in 2011 – measures should enter into IMO should agree measures in 2010, adopt in 2011 – measures should enter into force in 2013force in 2013

EU Legislation!!EU Legislation!!


UNFCCC UNFCCC negotiationsnegotiations

Launched in December 2007 – Bali RoadmapLaunched in December 2007 – Bali Roadmap Comprehensive post 2012 Climate Change regimeComprehensive post 2012 Climate Change regime Scope:Scope:

Enhanced commitments / new commitments Mitigation More states Financing New gases, New sectors Adaptation Legal issues Response measures Flexible mechanisms Reporting

MEM, G8 MEM, G8


Negotiation tracksNegotiation tracks

Kyoto Protocol and its review (AWG-KP)Kyoto Protocol and its review (AWG-KP) Long Term Co-Operative Action (AWG – LCA)Long Term Co-Operative Action (AWG – LCA) SBTASBTA SBISBI

Merging into one process during 2009Merging into one process during 2009


Global process - UNFCCC Global process - UNFCCC

29th March - 8th April, Bonn 2nd-12th June, Bonn 10th -14th August, Bonn 28th September – 9th October, Bangkok 4th-10th November, Barcelona 7th-18th December 2009, Copenhagen

Council WP International Environmental Issues (WIPIE) – Expert Group Bunker Fuels (EGBF)


EU UNFCCC SubmissionsEU UNFCCC Submissions

Parties should take actionParties should take action TargetsTargets IMO / ICAO should act by 2011IMO / ICAO should act by 2011 Financing potentialFinancing potential

Maldives proposal India proposal


Global process - UNFCCC Global process - UNFCCC

Mitigation from maritime (and aviation) very difficult topic

Financing from maritime transport (Indian proposal)

Key element of EU negotiation position (1/8) for Copenhagen 2009

‘Global’ does not necessary mean 100% coverage (possible exclusions for small vessels, LDC, search and rescue etc.)

UNFCCC agreement is only binding on states not other bodies e.g. IMO

COP 15 - Will not deliver reduction measures


IMO ProcessIMO Process

Excellent report in 2000Excellent report in 2000 MEPC 55 – MEPC 59 - WPMEPC 55 – MEPC 59 - WP No reportingNo reporting Operational index – voluntaryOperational index – voluntary Best PracticeBest Practice Management PlanManagement Plan Energy Efficiency Design Index formula Energy Efficiency Design Index formula

Application? Legal instrument? What reductions Which vessels?


IMO ProcessIMO Process

Market Based MeasuresMarket Based Measures First discussion at MEPC 59 ETS / Levy

Link to carbon price Registry Reporting of fuel purchased / fuel used Port state control Economic incentive Offsetting ‘gap’ Fund (destination / management)

Differences


CBDR!CBDR!

Rio principle:Rio principle:

‘‘common but differentiated common but differentiated responsibilities and responsibilities and respective capabilitiesrespective capabilities’ ’

of of states/countries.states/countries.

‘‘No more favourable treatment’ – avoid No more favourable treatment’ – avoid distortions of competition between distortions of competition between shipsships


USA developmentsUSA developments

‘‘Cap and Trade’ – same as EU ETSCap and Trade’ – same as EU ETS - 83% by 2050 - 83% by 2050 Waxman-Markey Bill - includes ‘bunker Waxman-Markey Bill - includes ‘bunker

fuels’ fuels’ Revenues in budget from 2012!Revenues in budget from 2012!

NZ, AUS, Canada?NZ, AUS, Canada?


Possible EC action on maritimePossible EC action on maritime GHG GHG emissionsemissions


Comprehensive action on transportComprehensive action on transport

All sectors need to make a contributionAll sectors need to make a contribution Comprehensive (and fair) approachComprehensive (and fair) approach EC action on transport GHGEC action on transport GHG

Aviation proposed 2006, agreed 2008 Fuel Quality Directive proposed 2007, agreed 2008 CO2 and cars proposed 2007, agreed 2008

Car Labelling (under preparation) Heavy Duty Vehicles (under preparation) Maritime Transport (if required)


Regional Regional actionaction

Sub optimal solution – preference for Sub optimal solution – preference for global measuresglobal measures

More difficult to design/implement than More difficult to design/implement than global actionglobal action

Less effectiveLess effective No distortion of competitionNo distortion of competition Not disadvantage EU maritime interestsNot disadvantage EU maritime interests Step towards ‘global’ actionStep towards ‘global’ action


Inclusion of aviation activities in the EU Inclusion of aviation activities in the EU Emissions Trading SchemeEmissions Trading Scheme


EU-ETS - OverviewEU-ETS - Overview

Applicable since 1 January 2005, for EU 25Applicable since 1 January 2005, for EU 25 Permit requirement for CO2Permit requirement for CO2 Mandatory caps on absolute emissions from around Mandatory caps on absolute emissions from around

10,000 installations across EU10,000 installations across EU Energy intensive sectors coveredEnergy intensive sectors covered Covers currently around 2 billion tonnes of COCovers currently around 2 billion tonnes of CO22

emissions, around half of EU’s total COemissions, around half of EU’s total CO22 emissions! emissions! Linking with other emissions trading systemsLinking with other emissions trading systems Credits from emission-reducing projects in 178 parties of Credits from emission-reducing projects in 178 parties of

KP useableKP useable


EU-ETS - Overview EU-ETS - Overview

Market-based instrument which allows for most Market-based instrument which allows for most cost-effective and targeted environmental policy cost-effective and targeted environmental policy - n- no market intervention! o market intervention!

EU ETS is driver for carbon market: in 2007 EU ETS is driver for carbon market: in 2007 valued at around €valued at around €40 billion (EU ETS: € 28 40 billion (EU ETS: € 28 billion)billion)

Cornerstone of Europe‘s strategy to implement Cornerstone of Europe‘s strategy to implement Kyoto Protocol - major structural element for Kyoto Protocol - major structural element for the post-2012 climate strategy the post-2012 climate strategy

Flexibility to link to other mandatory schemesFlexibility to link to other mandatory schemes


Aviation in the EU-ETS - timeline Aviation in the EU-ETS - timeline

European Commission Proposal 2006European Commission Proposal 2006 EP / Council agreement in 2008EP / Council agreement in 2008 Legislation published 2009Legislation published 2009 Obligations from 2010Obligations from 2010 Signal of EU ambition / political willSignal of EU ambition / political will Aviation Global Deal – BA/Air Aviation Global Deal – BA/Air

France/KLM/ Cathay Pacific/ Qatar etc. – France/KLM/ Cathay Pacific/ Qatar etc. – calling for UNFCCC coverage of aviation.calling for UNFCCC coverage of aviation.


Aviation in the EU-ETS Aviation in the EU-ETS

Legislation covers Legislation covers all flights to and from EU airportsall flights to and from EU airports (plus Norway, (plus Norway, Iceland and Lichtenstein)Iceland and Lichtenstein)

Excluded (de minimis) provision:Excluded (de minimis) provision:

operators operating on average less than 2 flights per day and;

operators with total annual emissions of less than 10,000 tonnes p.a.

Small aircraft and certain flights excluded

Scheme can be amended to take into account equivalent measures Scheme can be amended to take into account equivalent measures taken by other countries taken by other countries

Allowances can be freely tradedAllowances can be freely traded Aircraft operators can buy and use allowances from other sectorsAircraft operators can buy and use allowances from other sectors Limited use of CDM credits Limited use of CDM credits



Airlines will be required to Airlines will be required to monitor emissions from 2010monitor emissions from 2010

Airlines can apply for a free allocation of allowances in 2011Airlines can apply for a free allocation of allowances in 2011

Airlines will be fully included in the scheme Airlines will be fully included in the scheme from 2012from 2012

Total quantity of allowances allocated to the aviation sector Total quantity of allowances allocated to the aviation sector equivalent to 97% of average annual emissions 2004-6 = ‘cap’equivalent to 97% of average annual emissions 2004-6 = ‘cap’

From 2013 the total quantity of allowances to be allocated will be From 2013 the total quantity of allowances to be allocated will be equivalent to 95% of average annual emissions 2004-6 = ‘cap’equivalent to 95% of average annual emissions 2004-6 = ‘cap’



Free allocation based on share of historic Free allocation based on share of historic passenger/km performancepassenger/km performance

Rewards operators who have efficient Rewards operators who have efficient operationsoperations

Based on historic dataBased on historic data Allocation of operators to one Member Allocation of operators to one Member

StateState Equal treatment of all operators Equal treatment of all operators



15% of allowances auctioned15% of allowances auctioned

Auctioning proceeds should be spent on tackling climate change in Auctioning proceeds should be spent on tackling climate change in the EU and third countries (including ‘low emission transport’)µthe EU and third countries (including ‘low emission transport’)µ

MS must report on how they use revenuesMS must report on how they use revenues

Aircraft operators must monitor and report emissions to competent Aircraft operators must monitor and report emissions to competent authorityauthority

Reports must be verified by an independent verifierReports must be verified by an independent verifier

Guidelines for the monitoring, reporting and verification of Guidelines for the monitoring, reporting and verification of emissions from aviation being prepared emissions from aviation being prepared


Preparation of EC proposal on GHG Preparation of EC proposal on GHG emissions from shipsemissions from ships


Current status of EC workCurrent status of EC work

External technical support Contract started October 2008 12 months lead by CE Delft (NL) Scope of work:

Policy options, MAC, Impact analysis, Some stakeholder involvement (2009)

Mode shift issue (separate contract) Inter Service Group within EC Formal stakeholder process (timing undecided) No decision on measures (possible ‘package’ approach) Proposal ready for beginning of next Commission


EU Policy Options for further EU Policy Options for further developmentdevelopment

5 selected from ‘long list’ of 275 selected from ‘long list’ of 27

Detailed design and analysis in second stage of Detailed design and analysis in second stage of studystudy

Selection criteria: Environmental effectiveness, Selection criteria: Environmental effectiveness, cost effectiveness, legal analysis, cost effectiveness, legal analysis, ‘implementability’‘implementability’


EU Policy Options selected for further EU Policy Options selected for further developmentdevelopment

Selection:Selection:

Emissions trading, either (1) inclusion of shipping in the EU ETS or (2) emissions trading for shipping under a separate directive but linked to the EU ETS

(3) An emission tax (levy) with hypothecated revenues.

Mandatory (4) operational efficiency index or (5) design index.

(6, 7)) A baseline and credit system, (8,9) including differentiated harbour dues, based on an operational efficiency indicator or a design index.

A mixed 'package' of measures including operational improvements, technical improvements, speed reduction, voluntary actions, R&D funding and subsidies to improve maritime infrastructure, ships and innovation.


European Commission - planningEuropean Commission - planning

Formal consultation of stakeholders

Impact assessment

EC proposal (for new European Commission e.g. 2010)

EP and Council Decision + 2 years

Entry into force + 1 year (e.g. 2013)


Broad climate impactBroad climate impact

Black carbon – especially in the Arctic Black carbon – especially in the Arctic (Albedo effect)(Albedo effect)

Refrigerant gasses? Small but cost Refrigerant gasses? Small but cost effective?effective?


Some comments (1/2)Some comments (1/2)

GHG Reductions are possible (many with GHG Reductions are possible (many with savings, others at reasonable cost)savings, others at reasonable cost)

Very high energy efficient mode Very high energy efficient mode Customers and consumers want actionCustomers and consumers want action No alternative (for majority of inter-No alternative (for majority of inter-

continental freight)continental freight) Possible regional mode shift to be avoided)Possible regional mode shift to be avoided) Costs can be passed on to consumersCosts can be passed on to consumers Very marginal impact on demandVery marginal impact on demand


Some comments (2/2)Some comments (2/2)

Emissions need to peak in next decade Emissions need to peak in next decade Fairness - other EU sectors reducing since 2005Fairness - other EU sectors reducing since 2005 Cost – whatever target is agreed, starting late costs moreCost – whatever target is agreed, starting late costs more Image - emissions from EU aviation activities capped Image - emissions from EU aviation activities capped

below 2005 levels from 2012!below 2005 levels from 2012! Impact – causing dangerous climate changeImpact – causing dangerous climate change Complexity – designing and participating in multiple Complexity – designing and participating in multiple

schemesschemes Contributes to a negative image of shippingContributes to a negative image of shipping EU shipyards, EU equipment manufacturers – leaders in EU shipyards, EU equipment manufacturers – leaders in

related technology/systemsrelated technology/systems Position of US (?)Position of US (?)


ConclusionConclusion

All that is required is a fair contribution Win / win for shipping – lost opportunity Prepare for a mixed solution – UNFCCC / EU /

IMO Maximise effort to help IMO adopt effective

measures in next 2 years Engage non EU states in fostering a solution Global = no action EC action being prepared No decision taken on EC measures


Thank you for your attentionThank you for your attention

Mark MajorMark Major

European CommissionEuropean Commission

DG EnvironmentDG Environment

B-1049B-1049

Brussels, BelgiumBrussels, Belgium

[email protected]@ec.europa.eu

+32 2 295 0927+32 2 295 0927

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Reducing GHG from international shipping – a European perspective

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