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On 15 September 2020, the European Parliament adopted a proposal to impose a binding objective on maritime transport to reduce greenhouse gas emissions. Under the European Parliament’s plan, shipping companies would have to lower their annual CO2 emissions by at least 40 per cent for all ships under their responsibility. In the same proposal, the European Parliament concludes that the EU Emissions Trading System must cover maritime transport. The European Parliament’s position is a clear call for an increased contribution from the shipping industry to the EU’s climate change plans. Other EU Green Deal initiatives impacting the shipping industry, in particular on the taxation of maritime fuels, are also advancing.

Authors: Yves Melin Nicholas Rock Wim Vandenberghe Peter Zaman Philippe Heeren Jin Woo Kim Matthew R. Yeo

EU Green Deal and the maritime sector

Maritime transport accounted for 2.89 per cent of global anthropogenic emissions in 2018,1 and that share has been and continues to beincreasing, with a ‘business-as-usual’ scenario estimated to cause a 50% to 250% increase by 2050. For many years, the EU has engaged with third countries to reduce the impact of carbon emitted by maritime transport, but ultimately excluded the sector from most of its emission mitigation policies. The sector further benefits from an exemption on fuel taxation, and remains out of the scope of the EU Emissions Trading System (EU ETS).

The EU ETS covers around 45 per cent of the EU’s greenhouse gas (GHG) emissions and limits those emissions through a cap-and-trade system. With a progressive reduction of the cap, the EU aims to reduce total emissions over time. The trading system is designed to cut emissions where it costs the least to do so.

The European Green Deal proposed by the European Commission (Commission) in December 2019 questioned the exemptions for maritime transport. With this Green Deal, the Commission is proposing to make Europe the first climate-neutral continent by 2050. To reach this objective, the Commission announced that it would take a close look at the current tax exemption for maritime fuels, as well as an extension of the EU ETS to the maritime sector.2