The European Parliament has approved a new set of regulations that will require shipping to be included in the EU’s Emissions Trading System (ETS).
This move comes as part of a broader set of reforms aimed at strengthening the EU’s climate change policies.
Under the new rules, shipowners will be required to pay for allowances covering 40 per cent of emissions from next year, 70 per cent in 2025, and 100 per cent from 2026.
The parliament also agreed to allocate 20 million ETS allowances, worth approximately $2 billion as of today, to the shipping sector.
The new regulations will cover all emissions emitted by vessels calling at an EU port for voyages within the EU, as well as 50 per cent of emissions from voyages that start or end outside the EU, and all emissions at berth in EU ports.
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The decision to include the shipping sector in the ETS is seen as a significant move towards reducing global carbon emissions.
Shipping currently accounts for 2-3 per cent of global CO2 emissions and this figure is likely to increase in the future due to the growing volume of trade.
By requiring the shipping industry to pay for their emissions, the EU aims to incentivise the sector to reduce their carbon footprint. This move also helps to level the playing field between shipping and other industries already subject to carbon pricing.
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The new regulations are expected to receive final approval from EU countries, which is usually a formality.
Companies with ships within the scope of the EU ETS are advised to update their contractual arrangements and plan how to acquire the necessary emission allowances.
Most recently, the G7 Ministers for Climate, Energy, and Environment called on the shipping sector to reach zero emissions by 2050 during talks held in the northern Japanese city, Sapporo.
These talks came in conjunction with a 36-page document outlining the G7’s commitments ahead of a summit in Hiroshima in May.