On Friday 20 May, the French Presidency of the Council of the European Union sent Member States a new draft compromise on the revision of the EU Emissions Trading System (ETS), including proposals for the maritime sector.
These proposals aim in particular to avoid circumvention of the text proposed by the European Commission in July 2021 (see EUROPE 12762/1).
It plans to extend the current ETS: - to the total CO2 emissions of large ships (with a gross tonnage of more than 5 000) calling at an EU port on voyages within the EU (intra-EU); - to 50% of CO2 emissions from international voyages of large ships starting in the EU or ending outside the EU (extra-EU voyages); - emissions from large ships docked in a port located in the EU.
According to Paris, some shipping companies could then decide to change the routes of their ships in order to call at ports in countries very close to the EU and thus avoid participating in the ETS.
Such bypasses “will not only reduce the environmental benefits of internalising the cost of emissions from maritime activities, but could also lead to additional emissions due to the extra distance travelled to escape the application of the (ETS) Directive”, the draft compromise reached by EUROPE points out.
The Presidency therefore suggests clarifying the scope of the revised directive as regards the maritime sector by adding the notion of ‘port of call’, defined as “the port where a ship stops to load or unload goods or to embark or disembark passengers”.
The ETS would apply as follows: - to 100% of CO2 emissions from large ships on voyages between two ports of call within the EU; - to 50% of the CO2 emissions of large ships engaged on voyages from a port of call under the jurisdiction of a Member State and arriving in a port of call outside the jurisdiction of a Member State; - to 50% of the CO2 emissions of large ships engaged on voyages from a port of call outside the jurisdiction of a Member State and arriving at a port of call within the jurisdiction of a Member State; - to 100% of the CO2 emissions of large ships berthed in a port of call located in the EU.
Following this clarification, the Presidency proposes to exclude from the notion of port of call certain calls in external ports close to the EU, where the risk of “evasion” is greatest.
In addition, it wishes to establish a limit in terms of distance from the EU territory in order to limit the risk of evasion while not imposing a disproportionate additional burden. The exclusion of the notion of port of call would also only apply to container ships and ports whose main activity is the transhipment of containers (transfer of cargo from one ship to another ship or another means of transport).
According to the French proposal, the Commission would thus be required to establish, by 31 December 2023 at the latest, by means of implementing acts, a list of neighbouring container transhipment ports located within 300 nautical miles (approximately 555 km) of the territory of the Union where the share of container transhipment exceeds 65% of the total container traffic of that port during the most recent 12-month period for which relevant data are available.
This list should be updated by 31 December and every two years thereafter.
In addition, the Presidency proposes to exclude from this list ports located in a third country which apply equivalent measures to the ETS in order not to impose double carbon pricing on certain ship voyages.
No automatic extension to small vessels
Concerning ships with a gross tonnage of less than 5,000, Paris believes that their inclusion in the ETS would be too early “for reasons of administrative practicability”. The same applies to non-CO2 greenhouse gas emissions from shipping.
The preliminary draft thus provides that the Commission shall present, by 31 December 2026 at the latest, two impact studies, one on an extension of the ETS to emissions from ships of less than 5,000 gross tonnes and the other on the inclusion of additional greenhouse gas emissions from maritime transport.
Inclusion of the waste sector
In addition to the issue of the maritime sector, the draft compromise also includes other changes to the Commission's original text.
One of its new features concerns the waste sector.
According to the French document, the Commission would be required to present, by 31 December 2026, a report assessing the impact and feasibility of extending the ETS to emissions from hazardous or municipal waste incineration plants from 2031.
This report should be accompanied, if necessary, by a legislative proposal along these lines.
For their part, MEPs on the European Parliament's Committee on the Environment, Public Health and Food Safety (ENVI) want this report to be completed by the end of 2024 in order to extend the ETS to the municipal waste sector from 2026 (see EUROPE 12954/2, 12951/9).
ETS2 left out
Like the first draft compromise (see EUROPE 12939/2), the new French Presidency document does not address the issue of creating a second carbon market for greenhouse gas emissions from heating of buildings and road transport (ETS2).
See the draft compromise: https://aeur.eu/f/1th (Original version in French by Damien Genicot)